What I would like to have is the desktop split into separate areas (windows?) and that not be restricted (not only half or one quarter, but arbitrary many splits). Then, any split could have a number of tabs, including just one. And the tabs could be anything. The right half of my screen could be a container with tabs, and one tab be a terminal, one be a browser, and one be a text editor.
Currently, the text editor can have tabs, but they are all text files, the terminal can have abs, but they must all be terminals, the browser must all have tabs with pages...
The whole desktop being managed like an IDE seems like it would accomplish it.
On a separate note, there seems to be something wrong with the analogy you're using. You say it does not make sense to have a terminal in an alert box. Going with the filelsystem analogy the author suggested, that would be like having a directory inside a text file. Yeah, it doesn't make any kind of sense. There are intermediate nodes (folders, windows, tabs) and leaves (files, editors, web pages, videos, terminals). The point seems to be to have infinitely nested intermediate nodes, and leaves at any level. So the alert box could be inside 5 window splits and 3 tabs, but of course inside it would never be anything else.