Feels like I'm missing something... If I press ctrl-z ctrl-z, I expect the last 2 things typed to be undone. Based on what he's saying, the first ctrl-z undoes one step, and the second ctrl-z undoes the undo i.e. puts me back where I started, with no way to get back further. Is there a special case for multiple undo's in a row? If so it seems unclear where to draw the line. If not it sounds nonfunctional.
There is no line. It is just one long linear list. An undo operation is an edit to the text after all. So the edit made by the undo operation also goes as a text edit operation in the undo list.
This is the way undo has always been in Emacs. I wouldn't say it is nonfunctional. I use this in Emacs undo, redo (which is undo-of-undo) and it feels okay most of the time. It is good to know that Emacs will never lose any edit even if I have performed a confusing series of undos and redos. But it can get confusing pretty soon if we are undoing and redoing on the same edit too many times.
That is why many people don't like linear undo history and install an undo-tree plugin which makes undos easy to navigate in a tree. Yet another reason to design some computer/software history lessons so that devs can learn from the existing techniques, their adoption, benefits and complaints.