Pokémon Go could never have been made if this was the law.
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Even if you could host it on just one or a few machines, if you sign up for one server and your buddy joins another, you can't do raids or anything together. And each of these player hosted servers has a player limit.
Anti-cheat that isn't being actively updated is next to useless. Community servers would be botted to hell.
The game requires a maps tile service. Expecting Niantic to provide map tiles for anyone to download is insane. They might not even own the rights to do that.
It's virtually impossible for Pokémon go to remain in a "reasonably playable state" after the servers shutdown.