The fact that you're aware that most people can't sing well is evidence that lack of singing ability in no way deters people from singing along to their favorite songs. You've kind of answered your own question: "most people" are probably the target demographic.
Yeah, the huge number of "sing-along versions" of movies on Disney+ make it pretty clear what at least one major target market for this is. See also: the overwhelming majority of home-karaoke devices that are purchased. Most of the market's shitty overpriced devices that barely work, aimed at kids. This replaces those with something way the hell better, on a device that also does a bunch of other stuff.
I know the last thing I want is for some random person to sing the song we're all listening to given that most people can't sing.
I find myself usually telling the kids in the car to pipe down and let the artist sing.
So I'm really interested in understanding the demo for this feature.