Great question — answering as the UphillTech team:
No, standing is not illegal in Venice . I think the quote got lost in translation. The Italian version says: È proibito comunque sostare per consumare cibi o bevande ad esclusione delle aree in concessione ai Pubblici Esercizi. As a native Italian speaker, I would translate this as: It is forbidden to stop to eat or drink except in areas designated to Public Spaces Used Commercially (i.e. bars, restaurants, fast-foods, ice-cream vendors, etc.). Which basically means " no picnics ".
Full answer by JoErNanO: https://travel.stackexchange.com/a/108029 (CC BY-SA 3.0).
Need it done for your business? UphillTech.