Thanks for your comment! I'm one of the editors of Distill.
I understand the task to be different from regular pixel segmentation in that it's set up in the cellular automata context and message passing is only allowed between neighbors. I think this is what the authors intend by "each pixel in the digit needs to coordinate locally".
With that said, you bring up a good point that it could be misread. I bet the authors would be happy to update the paper and clarify if you wanted to engage!