In that video it's running on a modern system using hardware accelerated rendering. It didn't look like that back in the day.
...Actually, I'm pretty sure Thief did get hardware rendering at some point. For one thing, the finished product uses D3D.
You are correct the shipped game absolutely used hardware 3D acceleration .. by 1998 3D cards were quite popular, that was the early nvidia and late 3dfx era.
This was even mentioned in the post.... The author left the company for a short while and returned to add hardware rendering.
I've seen screenshots of Thief before but I never thought that the actual game is this smooth!
because its not software rendered, you "can tell by the pixels"