The subhead, does it matter given the housing shortage, can be answered in a word: no.
There's a lot more to whether either of these are good than these talking points.
As someone who has lived in both “squeezed on top of” and “more dense”, I’ll take the “squeezed on top of” over the “more dense” any day of the week. However my preference is “no one else living within a mile in all directions”.
Of course, I'm no fan of ultradense living. But in cities that have lots of businesses, parks, public transit stations, etc to walk to, density is a huge win, and the author uses the positive term to convey that.
Essentially the same trait is positive in one context but negative in another. Consider cakes and apples. Everyone wants a juicy apple. Nobody wants a soggy cake.
In this respect, I don't mean "density" as strictly spacial. The subdivisions I'm referring to stretch on for blocks with no businesses or services mixed in. Typically they're zoned strictly residential. No corner stores, transit, restaurants, coffee shops, etc. And this means people have to rely on cars to go do simple things like grocery shop or socialize outside the home.
There's quite a bit of research and discussion on the value of walkable communities if you're interested in learning more. Maybe you disagree, but I believe the kind of "density" created by mixed 5-over-1s is better for people and their communities than mile long cookie cutter subdivisions.
I think you'll find there's no squeezing involved in stacking. There might be if you get rid of the "yards" and push them together, though.
You don't need to use cupcakes. I added that because I thought the experiment would be more fun.