Also, the advent of engines like Unity and UE blur what "modding" means. The WC3 engine was flexible enough to be made into Dota, which was then implemented on the Source Engine as Dota 2. But why was the original Dota a mod, whereas Dota 2 isn't? It's hard to come up with a definitive answer to that.
Additionally, the originally Dota started as a mod, was then published as a game, and Dota 2 would then not count as a mod. Its not hard to come up with a definitive answer to that. A game is a mod if it doesn't stand alone, if it requires _modifying_ the structure/code of another game.
It's better to say that mods are games and to treat them the same than to try to differentiate them. The same design process that yields a successful mod will yield a successful game.
But the second half is completely false. Rust has nothing whatsoever to do with DayZ, except that it's vaguely in the same genre.
That's different from the typical lifecycle of a commercial game, which has a deeper level of marketing work to do before it can even consolidate a playerbase. There isn't a "Unity modding community", per se. There is a community of Unity developers, and players of individual games made in Unity, who have no broader associations. A game transitioning from the mod sphere of an existing game to an independently produced commercial title still has to overcome this gap, and most of them don't make it over the line.
The advice is sensible, nevertheless. If you can extend the schedule to focus on the core elements of the design as a "R&D" process where the majority must be thrown away, and only scale it up towards a shipping product as the concept proves itself, you minimize the risk of the budget being wasted on a flawed concept. Modding scenes, game jams, and micro-budget productions all have the benefit of weeding out most of the really early, risky design experiments, without wasting enough of people's time or money to care.
Even when conceiving the marketing for a larger production, the same advice works. The "trial balloon" or "landing page" method, etc. You still do design thinking when you market, but it's design on the topics of "how do we build a funnel" or "how do we make this a franchise." Still very easy to spend a lot of money on making a splash without getting the blueprint right.