It is legal for a copyright holder to do whatever the holder wants to do with the work. The issue at hand is just who owns the copyright. Copyright can be owned by multiple parties, and some of those parties can sign away all or part of their rights. Doing so does not limit the rights of the remaining parties. The authors of an article may sign away their rights, but they generally do not have the authority to sign away any copyright that belongs to their employer. In the US, and perhaps elsewhere, work you perform for your employer is also copyright to your employer. In fact, depending on the terms of your contract, you may have already completely transferred copyright of any work you perform as part of your employment (and academic research likely applies) to your employer. Thus, publishers may be asking you to sign away something that is not yours.
I am assuming that by top universities, you mean institutions like MIT. MIT encourages employees to fight total transfer of copyright by amending the copyright transfer agreement. The gist of the amendment is that MIT contends that the authors' copyright to the material is nonexclusive - it also belongs to MIT. Thus it cannot be completely signed away by the authors to publishing companies. MIT will extend its privileges back to the authors regardless of what the publisher intends. Thus:
The Author shall, without limitation, have the non-exclusive right to use, reproduce, distribute, create derivative works including update, perform, and display publicly, the Article in electronic, digital or print form in connection with the Author’s teaching, conference presentations, lectures, other scholarly works, and for all of Author’s
academic and professional activities.
Once the Article has been published by Publisher, the Author shall also have all the non-
exclusive rights necessary to make, or to authorize others to make, the final published version of the Article available in digital form over the Internet, including but not limited to a website under the control of the Author or the Author’s employer or through
any digital repository, such as MIT’s DSpace.
The Author further retains all non-exclusive rights necessary to grant to the Author’s employing institution the non-exclusive right to use, reproduce, distribute, display, publicly perform, and make copies of the work in electronic, digital or in print form in connection with teaching, digital repositories, conference presentations, lectures, other
scholarly works, and all academic and professional activities conducted at the Author’s employing institution.
Since these rights are non-exclusive, they don't prevent the publisher from providing high quality print and online versions of the article to their subscribers. They also do not prevent the authors and MIT from making the article publicly available in a noncommercial way.
While MIT has taken steps to explicitly assert its rights to do so, many institutions likely have such rights implicitly (for example, they may be stated in employee contracts) and see no need to limit or infringe upon their own rights.