Legacy nodes see the block size as 1MB and new nodes see the block size as larger than 1MB. But due to the segregation of witness data, more transactions can fit into a block and that makes the effective block size larger than 1MB even if some nodes don't see it that way.
You think the effective size is larger than 1MB, but the block size is still less than 1MB? So I won't win the contract bet?
Since they're relying on the subjective judgement of what the "main chain" is, I imagine that they're referring to a hard fork (new chain) garnering enough support to be regarded the "main chain".
So if I'm correct, you'll find out whether you win the bet around November when the New York Agreement's hard fork takes place. You could link to where it shows the exact wording though.