Additional Information (if any):
The sign is outside the fenced part of the school, directly on the sidewalk on the street, as you can see from the main picture and the support photo (and also google maps in case):
Since that looks like an advertising hoarding, and not a community information board, it’s possible reviewers simply looked for a rejection reason and picked that one.
As the red banner at the top says, anything there regarding Wayfarer is now outdated and should be treated as no longer valid, and the current Wayfarer criteria (Wayspot Criteria — Wayfarer Help Center) should be followed. The AMA is no longer valid.
To address your question it needs to be outside the school grounds. The boundary wall counts as school grounds. There is no other set distance so it is a case of a judgement call so there may be times when the whole context makes a specific object not eligible.
Not gonna lie, seeing the supportive information this detail want me to go home and add as much image proof as possible for popular restaurant. Thanks a lot!
[Might ended up getting generic business though ¯_(ツ)_/¯]