The statements are not contradictory at all. Some local storage is needed for people who will out of range of wi-fi. Like airplane travelers. But they don't need a lot of local storage. People just need enough local storage to bridge the gaps in wi-fi coverage. Internet access is ubiquitous but it isn't universal.

While on the internet Fire users will stream their content. They don't need a high powered device to do this as Amazon's cloud infrastructure will be doing some of the work. While off the internet the device just needs enough power to play videos, read books, and play songs and games. This doesn't require a heavy duty processor.