The SP is worded really strangely (to me at least). What exactly does it entail?

COVER YOU IN ANTS: When an opposing character targets a friendly Ant Swarm with an attack and misses, deal 1 penetrating damage to each opposing character adjacent to that Ant Swarm that didn't attack.

The last part, "Ant Swarm that didn't attack" is really confusing, can someone clarify?

The "didn't attack" is referring to the adjacent opposing characters.

It's all opposing characters that is not the attacker that is adjacent to the missed rat swarm that is dealt 1 penetrating damag.