1. Buffett bet against aggregate performance of hedge funds as an investment vehicle. If he restricted his focus to the highest performing funds of the past 10 - 30 years, he would have lost handily.
2. Buffett used absolute returns as the performance metric, not risk-adjusted returns. A portfolio with lower absolute returns but a significantly better idiosyncratic risk profile (and correlation to market/beta) can be superior to a portfolio with higher absolute returns but also higher risk.
Taken together, this means that Buffett's bet is a statement about the aggregate performance of the industry. It is not instructive for what performance is possible, or even for whether or not you should invest with the modal hedge fund (given the opportunity). It depends on investment goals and risk needs. It's also worth pointing out that "risk needs" is multi-dimensional, not just a sliding scale of how much e.g. leverage you're willing to accept. There is an entire sub-industry of hedge funds which explicitly expect to underperform on an absolute basis for long periods of time, but which service their clients with highly bespoke risk products. Clients are frequently well-informed and happy with this arrangement.
I say this because there is a tendency for people outside the industry to come away thinking hedge funds are a scam. Which...well, many are, to put it bluntly. But it's a lot more complicated and this isn't really the smoking gun you'd think it is.