The "HD ready" minimum requirements are applicable to any display device type, and within that broad context the words "aspect ratio" in the agreement refer to the "picture aspect ratio" (i.e. the displayable image based on the video frame), not directly as such to the physical screen aspect ratio of a (fixed resolution) display device.
The +/- 5% allows for some flexibility for the picture aspect ratio (and hence indirectly the physical screen aspect ratio).
AR is Picture Aspect Ratio
AR = Horizontal_Picture_Size / Vertical_Picture_Size
AR = 16:9 [± 5%]
AR = 1.78 [± 5%]
1.6889 < AR < 1.8667
This entails that display devices with a physical screen aspect ratio smaller than 1.6889 can comply only on the condition that the device has enough lines to still be using at least 720 lines when displaying an image in wide picture aspect ratio. Practically this would mean that the display device would be showing a “wide aspect ratio letterbox"-style overall image, with 720 lines used in between the (black) top/bottom bars.
Note also that likewise devices with a physical screen aspect ratio larger than 1.8667 would be using a “wide aspect ratio pillar box” -style operating mode.