It is fully open source.
Open source does not mean the maintainer is under the obligation to add features, or integrate PRs.
Says who? There are many free software projects, with public source code and free licenses, that are not developed openly. For example, lua itself (on which neovim is based). The lua team are adamant on not accepting external patches. And that is perfectly alright, and not contradictory with neither the letter nor the spirit of free software.
"Open source not open contribution" is increasingly seen, and people don't seem to mind, and the attitude described with regard to vim development seem less "thanks, bit no thanks" than that, so I don't imagine any majority have an issue with it.
If I finally get around to making and releasing some stuff I plan, "not open contribution" is where I'll be. These things are my toys, they'll go my way, though the source is there so feel free to fork if you need/want something I'm not planning to do or not planning to do soon enough (I'll even link to your efforts so people wanting the same know where to find it). Unless you want to pay for my time to maintain and support your feature going forward, of course!
Both development models are OK, and plenty of people are comfortable with both. I'd actually argue that most early/not-"modern" FOSS software have had the model of "you're welcome to contribute, but we ultimately own the codebase and therefore decides what goes in. If you're unhappy, feel free to fork", and it's not until lately, that some projects have decided to merge almost whatever people contribute.
Some projects even go as far as giving people direct write-access as soon as someone has got a PR merged, but I don't think that's very common, neither is the "merge without strict review" model you seem to referring to.
I am very comfortable with this model.