The big innovation was Pex's discovery of a way to output 8 bit samples by a single register write on the SID chip. The chip was never designed for outputing digital samples, and the approach leverages basically a bug in the chip design to achieve this.
The only innovative bit in this new demo (besides presuming to use a cartridge for storage) is the vector quantized compression technique.
This doesn't take away from the demo, but if say, EA, Epyx, or Activision were going to ship a game that played music like this, they would have had to fix it in 64k. So it's even more impressive when I see stuff that a typical home computer could have seen in 1983.
I remember the first few times I heard digi-mods on the C64, like Rob Hubbard's Skate or Die game intro (https://www.youtube.com/watch?v=vqRXxPl6bXA) and it absolutely blew me away. Full screen video + audio like that Onslaught Demo would have given me a heart attack.
This doesn't use REU. This uses a simple banked (EEP)ROM cartridge.
Cartridges have been used from the beginning, at first they were just 16 kB. Games have been released in cartridge format from 8 to 512 kB.
It's really impressive to be able to include any type of decompression when total budget per sample is just 21 clock cycles on a system where one instruction takes 2 to 8 clocks.
So I think you're underrating the achievement here.
See these 512 kbit 1983 vintage EPROM chips:
https://www.ebay.com/itm/INTEL-D27512-27512-IC-28Pin-DIP-EPR...
16 of these 512 kbit chips, some address decoding and banking logic. 1 MB cart.
Very much doable with off-the-shelf parts even way back then.