It's actually very clear:
Except as provided in paragraph
(c) of this section, no person may operate
an aircraft carrying any person
(other than a crewmember) for hire,
and no person may give flight instruction
for hire in an aircraft which that
person provides, unless within the preceding
100 hours of time in service the
aircraft has received an annual or 100-
hour inspection.
During a training flight, Instructor and student are both crew members. The instructor is not providing the airplane, as would be the situation at a flight school.