Well, that certainly does look deeply complex, so I have no reason to think it wouldn't create deeply complex discussions.
Kidding aside, one thing I like about it is that it makes discussions start around specific snippets of a source text. That is to say, you begin a thread by selecting a piece of text. I am always very skeptical of top-level comments on HN that don't begin with a quote from the article being discussed—more often than not, I am suspicious that the person even read the text before commenting.
That doesn't address how you'd have conversations around anything except a block of text. Videos, pictures, games or applications, etc.
And they don't solve the toughest UX problem with this kind of pattern, which is how you treat overlapping excerpts: are they part of the same thread, or a new thread, and how do you define the boundary?