The finding on point two confuses me as well.
They say that the domain name was not descriptive of the goods, and was not competitive with the Complainant's goods. Therefore, the finding should have been that the use by the Respondent was arbitrary, or was actually argued, suggestive, which means that the Respondent had accrued service mark rights in the term. They even mention that the Respondent had been using a distinctive logo on its site.
I believe the panel was so focused on "is this a descriptive use?" that they completely missed the point that a suggestive use is capable of functioning as a trade or service mark.