Paradigm 1 - interconnected, hyperlinked web of text-and-content-based documents: open, accessible, amenable to indexing and tooling and so forth.
Paradigm 2 - delivery vehicle for cross-platform, full-featured, somewhat-security-sandboxed, applications.
I agree with the article that it's sad if Paradigm 1 is trampled to make way for Paradigm 2, just because (as you point out) we haven't been able to develop a viable alternative. In theory these could coexist, but the point of the article is people are being trained in Paradigm 2 and try to use it for purposes that are much more suited for Paradigm 1.
Just as sad, Paradigm 1 is more oriented around decentralization, giving power, options, and information to the user; Paradigm 2 is often exploited for lock-in, control over user's decisions, collecting information about the user, etc.