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How much BTC exists in the blockchain is ultimately irrelevant. What matters is the amount of BTC actively circulating.

If you deposit 1 BTC on Binance, then I can get your BTC in the form of a loan. I can even withdraw your BTC. Meanwhile, Binance records still say you have 1 BTC, they even allow you to trade with it. So there's really 2 BTC in circulation. That BTC is duplicated, it's in multiple places simultaneously.

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That is correct. And, fundamentally, this is possible because the Bitcoin chain is not the only ledger out there tracking BTC. Each (centralized) exchange has its own internal ledger, tracking how much BTC its customers have.

And of course, the music keeps playing as long as Binance has liquidity.

Still doesn't have anything to do with Bitcoin, or the bitcoin supply.

They're explaining that your algorithmic science money is susceptible to the same forces that Crypto Faithful say turn USD into Fiat Clown Coins

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