I think you're misunderstanding their claim.
They are not making a claim that denial is better for society.
They are making a claim that denial is better for the accused (and only in certain situations).
"The accused" is interesting framing. I would hope that no one expects the innocent but accused to apologize for something they didn't do.
For the accused who are guilty, if we agree that denial is worse for society but currently better for the guilty, what can we do to change that, so that it is better for them to acknowledge fault and worse to remain in denial?
If there was a way to neuter this power, or better ensure the punishment enacted by the mob fits the crime, less people would advocate for denial.
As it stands, public shaming often goes way overboard.
For those interested in hearing more stories of this: https://www.ted.com/talks/jon_ronson_when_online_shaming_goe...
The problem is when this same internet mob protocol gets applied to average citizens. The internet mob deals massive amounts of damage to a person's reputation and psyche. And, there's no way to temper the punishment to meet the crime. For your average wrong-doer, it's extreme overkill.
Take, for example, the woman who recently got called out for making racist comments to a black man in the park. She was clearly in the wrong, but her entire life is ruined now due to the internet mob. The punishment did not fit the crime.
Why is it worse for society? Guilt is already an emotion that exists for society, not for self-interest, it relies on morals, which all are learned through other people. If people are leaning more towards denial, it means that the cost for an individual to do something immoral is already too high, doesn't leave much room for mistakes that people inevitably make from time to time, so more people denying might be a natural feedback loop to make more space.
I have no idea where this idea comes from. People will attempt to avoid consequences even if those consequences are just.