That part is absolutely fine and is covered in the original article under "Wait, aren’t WordPress plugins open source and free to modify": ( https://wpfusion.com/business/regarding-our-cease-and-desist... ) You can copy, fork, and even "sell" free software if you like, as long as you comply with its license terms.
This is a trademark dispute, not a copyright dispute.
The trademark dispute here is the use of the phrase "Advanced Custom Fields" in Automatic's marketing and on their website, as illustrated in the picture just above that section of the article. Automatic's core response is probably correct in a technical detail: e.g. in marketing for "Open Office Sheets", you are allowed to say "Open Office Sheets is better than Microsoft Office Excel because..." Even though "Microsoft Office Excel" is trademarked by Microsoft, you're using the name to draw clear distinctions, not to imply endorsement, nor to confuse people into thinking you're selling their product.
It would be an interesting legal case because even though Automatic may have been using the phrase in an allowable way, the result did create confusion in customers. Customers aren't reading the full sentences of the article, they're using Google to find something, clicking "buy", and then later contacting WP Engine for support for something they bought from Automatic. That's proof of the confusion that Automatic created.