That provision grants Congress the power to pass copyright laws with limited durations, but where they choose not to exercise that power (as they had not for pre-1972 sound recordings until 2018's Classics Protection and Access Act) or to pre-empt the states' ability to rule or legislate on the topic, the states can do exactly what they could without that provision.
If this were in a Commerce Clause context, Congress' decision not to act on a given matter still wouldn't allow the states to restrict or legislate on interstate commerce, by the principle of the "Dormant Commerce Clause".
By analogy, I could imagine a "Dormant Copyright Clause" doctrine, meaning that the states shouldn't have the power to legislate copyright other than in whatever contexts the Federal government explicitly leaves to them.
This is all theory, of course. But actual case law does say something at least similar. See for instance Sears, Roebuck & Co. v. Stiffel Co., a case in which the Supreme Court said (in the context of patents) that the Constitution reserves the power over them to the Federal Government exclusively, and that the states can't give patent protection to something that Federal law doesn't protect.
>other than in whatever contexts the Federal government explicitly leaves to them.
This is what Congress did when passed the ~1978 legislation (even if somewhat retroactively, based on your dormant commerce argument). It explicitly affirmed existing state law for previous recordings, while declaring exclusive Federal jurisdiction for the future.
