It is a good explanation.
Unfortunately the answer to "under what conditions are shares issued for services not restricted shares" appears to be "under reasonably rare conditions".
S-8 registrations appear to deal primarily with employee issuances, requiring that the issuer be an SEC filer and current in their filings.
The vast majority of otc issuers don't qualify under those circumstances and regularly issue shares to non-employees for services. It is those issuers that are the subject of my concern.