The article does get around to explaining it better if you keep going.
it certainly seemed to me that no one was relying on N-S as an accurate predictor of motion (as you would a newtonian model of a ball rolling or something like that), but rather just as a first order approximation
Numerical methods for solving the Navier-Stokes equations are approximate and therefore diverge from the correct solution. The same is true for a ball rolling down an incline, but the inaccuracies are smaller than you would ever care about in the real world. What your colleagues were saying about the Navier-Stokes equations is that the numerical error was often large enough that the calculated solutions were known to diverge from mathematical reality in significant ways, and therefore seeing them diverge from physical reality was consistent with physical reality and mathematical reality being the same.
[1] http://www.claymath.org/millennium-problems
[2] http://www.claymath.org/sites/default/files/navierstokes.pdf
My impression is that so far DNS matches experimental results well given that the experiment actually represents the situation of interest. For example, I am aware that at least some "Kelvin-Helmholtz" experiments don't match DNS well at all, and the DNS is considered more credible than the experiments because in the DNS case you know all of the inputs, whereas in the experiments the initial conditions might be close to the desired case, but apparently not close enough. (The Kelvin-Helmholtz instability is of fundamental importance but is not easy to obtain in isolation experimentally.) "Sensitivity dependence on initial conditions"/chaos means that close may not be enough.
There also is the issue of numerical error from the fact that you are using discrete equations, but usually simulators take steps to check this is negligible. (Which may not be enough.)
You're confusing how models are used by (some) engineers (in some applications) with how models are used by physicists and mathematicians. Engineers have to deal with all kinds of uncertainties, from matetial parameters to use cases to limit states to wear and fatigue and geometrical deviations etc etc etc. Therefore, engineers develop robust designs to comply with all design requirements under any plausible and probable scenario given a design life. To accomplish this, engineers use models to provide approximate but accurate results that are on the safe side of any limit state. Yet, eventhough designs need to be robust, simulations do need to be accurate.
These findings suggest that low-resolutoon Navier-Stokes simulations that were believed to be on the safe side may actually not be on the safe side. These finding are important, as they will illicit significant changes on how Navier-Stokes simulations are used in cases where accuracy matters.
What is right is its starting point on the conservation of momentum and energy. Then it makes certain assumptions about the stress-tensor which are not necessarily true. Meaning, you can derive the N-S from consv. of mass and E and a certain stress tensor (ST), but its not derived from a universal ST.
If they are identical but not equal and these small differences in the input lead to large deviations in the output then that's pretty much the definition of a chaotic system.
Edit: I've just browsed through the paper in question and it actually demonstrates thar an approximate (weak) solution is not unique, which means that the exact same inputs in may have multiple weak form solutions.