According to https://news.ycombinator.com/item?id=48457280 it affects all people ordinarily resident in those territories, not just their governments:
> You are not a person or entity that is:
> (a) located in, organized under the laws of, or ordinarily resident in any country or territory that is the target of comprehensive U.S. sanctions;
> [other 'or' conditions]
Let's Encrypt can issue certificates for non-government entities in Iran and Russia due to statutory exemptions protecting personal communications, alongside specific Office of Foreign Assets Control (OFAC) authorizations designed to promote Internet freedom and human rights.
We will look into whether we can make things more easily understandable in the subscriber agreement.
"You are not a person or entity that is: (a) located in, organized under the laws of, or ordinarily resident in any country or territory that is the target of comprehensive U.S. sanctions; "
this says nothing (edit: specific) about government (edit: only), and is applicable to normal people in those areas.
Still needs updating if it's supposed to only apply to governments, though.