What Dairy Queen uses instead of ice cream is "soft serve mix" which is around 5% milk fat, which does not meet the FDA's 10% requirement for "ice cream," so instead it's called soft serve.
Soft Serve ice cream is a lighter and airier frozen dairy dessert that has added stabilizers like carrageenan.
This unique blend gives the soft serve, it's signature smooth and less dense texture, which makes it perfect for treats like cones and Blizzards.
Real ice cream has to have at least 10% milk fat, and Dairy Queen's soft serve only has around 5% milk fat, which classifies Dairy Queen's ice cream as reduced fat or light dairy product, so instead it's called soft serve.
Beyond the milk fat, Dairy Queen also uses other ingredients in their soft serve ice cream which includes nonfat milk, sugar, corn syrup and stabilizers like carrageenan and mono-diglycerides for texture.
Soft serve ice cream also incorporates more air, "which is around 40% overrun" during freezing, which makes the soft serve lighter and softer than traditional dense ice cream.
And due to these differences, Dairy Queen refers to it's ice cream products as soft serve, treats or sundaes, instead of ice cream, which adheres to the FDA guidelines.
In short Dairy Queen's famous treats while thought of as ice cream, aren't legally "ice cream" because their soft serve contains only about 5% milk fat, falling short of the FDA's minimum 10% butterfat requirement for "ice cream," so they call it "soft serve" or "frozen dairy dessert" to comply with regulations, resulting in a lighter, fluffier texture.