I am not surprised at all that Meta was able to generate some positive returns by feeding the last hidden layer back into the model auto-regressively.
The method of training they describe in the paper is really cool. Summarized in Figure 2, they train it with a corpus of step-by-step text instructions and then across multiple stages, they iteratively replace one of the textual steps with a last-hidden-layer embedding and see what the model spits out. The weights are then updated through cross-entropy loss as the additional text tokens are generated once again.
So they're basically rewinding the output, replacing an increasing number of textual steps with hidden state embeddings, and playing it forward as the model gradually learns to do all of its step-by-step thinking using just the hidden state data.
In a way, this might be how humans learn to think through language. Our parents teach us using words and our brain gradually replaces the words with thoughts until we can replicate the action or solve the problem ourselves without anyone guiding us with words.