For anyone like you (and me) who says being laid off doesn't mean bad performance you have someone else saying it's good that Meta, Twitter, etc. are cleaning house, getting rid of all the slackers. Those are the folks calling it a red flag later.

The thing, is we want to believe that a company makes careful decisions about whom to lay off. We know it doesn't quite work like that but as you said yourself there can be a bunch of reasons. And with that context you're still looking at the reality that the company didn't deem the laid off workers important enough to keep.

I don't agree with what happened to the candidate here and we are all at risk of being laid off after all, but at the same time we cannot just assume the companies didn't have reasons to select one person over the other. And being overpaid itself might be a red flag for some hiring managers.

What I mean is, we cannot have it both ways, saying RIFed doesn't mean anything while at the same time assuming that companies follow a rational decision process and don't just play roulette.