Yeah for something that is supposedly intuitive this is the worst explanation I have ever read. I think what he's saying is that:

It works exactly like normal undo/redo, but if you make an edit that would normally wipe your "redo stack", then instead that redo stack is moved into the undo stack.

So:

  Type "hello"
  Type "world"
  Type "!"
  Undo
  Undo
  (Editor is "hello", with "world" and "!" on the redo stack)
  Type "dave"
  (This would normally wipe the redo stack but instead it moves it to the undo stack)
  Undo
  (Editor is "hello")
  Undo
  (Editor is "helloworld")
  Undo
  (Editor is "helloworld!")
  Undo
  (Editor is "helloworld")
  Undo
  (Editor is "hello")

I like the idea. It's a little weird that typing changes the undo stack but it already can change the redo stack so I don't think it matters.

It needs an understandable explanation and ideally a web demo to gain traction though.