Mutt's threads aren't all-in-a-page; you only see one message at a time.
Yes, you are correct. Though in mutt you can hit 'n'/'p' while reading a message in a thread and you will move to the next/previous email in the threading order. I would imagine one would need to use scrolling in gmail for any substantial thread which results in a pretty similar experience (i.e., you only see one or two emails at a time).
Maybe he wants incremental search on the content.
Anyhow, I prefer threaded + n/p myself. For complicated discussions (like at work) it's much better to see exactly which mail is in reply to which (not just time based).