If you are a business person who does not know how to program, it makes sense to be conservative on what you build, since programming resources are scarce and expensive. If you are a programmer, the only scarce resource is your time.
That's all the Lean Startup philosophy is saying: don't waste time building something that nobody cares about.
But the OP is right: it can be used as an excuse to not get anything done!
Your main goal is either to build software or to build a business. If you care about software craftsmanship, then your focus will be on elegant code, test coverage, etc. If you care about business craftsmanship, then your focus will be on the customer, revenue, etc.
From watching him code and also reading about how to change the height limits in Minecraft it appears to me that he may slip into some questionable coding practices at times. I've not read the code but it left me wondering why isn't there a single global height variable, never hard code numbers! I watched him copy and paste chunks of code and then manually change variables, often missing some and then having to go back. Again, not a good idea if you don't want to introduce bugs unless you're coding for fun. Cut and paste should really be disabled on programmer's machines!
Not that I'm criticizing, I've done the same thing. But proof of concepts are far easier than finished products, even unpolished finished products.
It's fun to play with a new concept. But most of the time it's not so fun to put in the effort to polish it or keep a tight code base. In fact it's downright laborious.
Just off the top of my head when you sit down and really have to code instead of coding for fun there's time, boredom, mental effort, lines of code, language limitations, testing methods, deployment, project management and on and on that are all resources to be managed. And if you do it for yourself there's also the constant doubt nagging you.
Are you doing the right thing?
So while the glib soundbites are fun, they're very misleading, lets sniff a little reality.
If you are a programmer, it can be tough to push stuff over the finish line.
Adding the dull login system or the annoying signup page, both trivial and so mundane, are usually much harder than implementing that tricky calculation.
I do think that doing something like that challenge is an excellent way to remind yourself why you got into coding in the first place. The joy of coding. But let's not confuse it with writing a new SaaS app.