[1] Is it OK to make a new product that sits on top of UE4 that allows users to easily make games? These games can be shared with other users of the product so they can play single or multiplayer experiences. It would be like games in the style of Microsoft’s Project Spark and Little Big Planet. It’s game making for the masses (not developers).
[2] If someone makes a really great game with the tool, can they then sign up to UE4 and sell their game like any other developer?
I just posted a summary in the thread that DarthB linked, but:
The EULA prohibits shipping a game/product to the general public with a tool or tools that allow for the creation of standalone products. The EULA also prohibits shipping a game/product with Epic’s tools in modified or unmodified form. However, you could make a game with a tool, so long as you made that tool yourself, that was like a level editor for example. Like in Little Big Planet, as an example, the in-game editor allows for the creation of new LBP levels but not standalone games. You could do that in a UE4 game so long as you built the in-game editor yourself. If the tool allows for the creation of standalone games/products, or is based on Epic’s tools in modified or unmodified form, you are permitted to distribute it but only to other engine licensees.
Anybody can sign up for a UE4 subscription, but per my response above, if your product allows for the creation of standalone products, then the recipient already needs to be a UE4 licensee.