Somebody put up cash on the barrelhead, a bounty for the Urbit developers and hypemen to develop an actual app -- a simple strip-poker game -- in Urbit.
There were no takers.
The question of "but what can you actually do with it?" went unanswered by Urbit's own promoters, even when they were incentivized with real cash money to come up with an answer.
I never heard of this. Like, never even in passing have I seen that bounty mentioned. One of the trivial apps that was demoed literally years ago was a simple tic-tac-toe app, and there is even a MUD written for Urbit, so saying it's impossible to write apps for it isn't true. The web server is hosted in Urbit, along with the developer chat room. And really, the problem isn't that apps are impossible to write but that they would be easier to write using a different platform, which is probably true (for strip poker at least), since you don't need anything more complex than a couple hundred lines of C.
IIRC, that particular episode happened in, like, 2013, when Arvo (Urbit OS) was barely prototype-grade. Urbit developers decided to work on the OS rather than chase after a bounty of about $1000.
There was also no meaningful documentation at the time, which is why nobody else could complete it.