And it’s true. There does seem to be a misunderstanding by users about what purchasing the Domain Name Upgrade allows you to do on WordPress.com. So let’s clarify:
On WordPress.com, you can register a custom domain, such as example.com, and use it instead of your blog’s current address, like example.wordpress.com. Your old address will still work, but we will automatically redirect traffic from your old address to your new one.
Regardless of upgrade, be it the Space Upgrade, the Domain Name Upgrade or the Custom Design Upgrade, users cannot upload and use “WordPress” themes they may find elsewhere on the Internet to their WordPress.com site.* Uploading files to your WordPress.com site is for the purpose of display or download only.
*WordPress.com users can activate any of the 200+ (and growing) themes available in their Dashboard under Appearance>Themes.
(Twitter doesn’t let you grab the entire conversation in one go. Sorry for the duplicate tweets above.)