It even shows the contradiction in the GUI. 
Is it just me, or is this a known issue? (Are rate limits supposed to affect only WAN connections?)
They are, by default. There is an option to also apply to LAN connections.
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https://docs.syncthing.net/users/config.html#config-option-options.limitbandwidthinlan
I personally use this one quite often actually, as many old/weak Wi-Fi cards cannot sustain high bandwidth that is normal on LAN, resulting in bringing down the Internet on the device completely.
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Where can I find this option?
The one linked by @tomasz86
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