Translation:They make the ice cream with an industrial machine.
The tricky thing is that "gelato" actually is an English word now, but it doesn't have the same meaning as "gelato" in Italian. In Italian it means "ice cream" (of any type), whereas in English it specifically means "fancy hand-made Italian-style artisanal ice cream". I suspect that the sentence is trying to emphasize that point :-).
Duolingo should accept gelato as an english word.
I honestly think they're two different products. Gelato is denser, has less incorporated air, less fat and is served at a different temperature than the ice cream you might find in ice creameries outside of Italy (well at least where I live and in my experience in the USA as well).
If they're two different products, Duolingo shouldn't accept "gelato" (Italian) as a translation of "gelato" (English). As you say, in English it means a particular variant of ice cream with particular properties (less air, etc.), whereas in Italian it just means ice cream in general. If you wanted to translate the English "gelato" into Italian, you'd have to say something like "gelato artigianale".
Gelato IS regularly used in the US now, when a place sells gelato, which is creamier and softer than typical American ice cream. In my neighborhood there are 2 places that are gelato places, and 2 that are ice cream places (and then some pinkberries, but let's not go into that...) So I think if the only "mistake" is someone says "gelato" instead of "ice cream" it should be marked correct.