Well, it does basically tell you that if you are living in Canada, you should apply inland, see:
* If your spouse, partner or accompanying dependent child lives with you in Canada, use the Application for Permanent Residence in Canada—Spouse or Common-law Partner.
* If your spouse, partner or dependent child lives abroad, use the Application to Sponsor a Member of the Family Class.
So that's probably what they mean when they say it would be contradictory to give a Canadian address as your residence.
I have however heard that it's always your right to have your application processed in your country of nationality so even temporary foreign workers and students who are living in Canada for years can still apply outland and many do.
On the sponsorship form where it asks you your address of residence, it also asks if you have legal status for a year in that country and it's very easy to just put the Canadian address and answer the next question with a no and put a letter of explanation if you want.