I think that people use "covering (negligible) costs" as a euphemism for trying to businessify their side-project. Covering these low costs would be the first, modest goal in trying to convert the project to a business anyway. If they instead told their friends or web-colleagues that they're trying to grow their web-trinket into a viable business, they'd probably be criticized and made fun of and ultimately talked out of the idea. So instead they talk about "covering costs," and it's pretty much a low-investment, no-risk way of experimenting with making something a business.
Yeah, I can see your point. Covering costs is definitely a milestone that I look toward when monetizing, but only as a first step on the climb toward profitability.
