The state is arbitrary to the Host system, just like the state of memory before it is initialized is arbitrary to us. In the guest (Embedded) system, it's unknowable. Arbitrary is a term Gods (creators of embedded systems) use to refer to things that are unknowable from within guest systems, and that they don't particularly care about from the vantage point of the host.

The only assumption Yegge is making is that the Big Bang wasn't self-started from a confluence of previous state, but "initialized", overwriting that state, which almost makes sense: black holes overwrite later state, rendering incoming material arbitrary to its later states (they're an "information sink"), so why couldn't the Big Bang overwrite earlier state, rendering outgoing material arbitrary from its previous state (an "information tap")?