Back we go to completely broken document outlines. Not that we ever fixed it in reality, as the announcement points out, but this is a big admission of defeat for the semantic web.
Essentially, it was hopeless to expect that designers would adapt their stylesheets to style headings based on the number of sections surrounding them. And if the visual styles don't adapt, nobody will use the outline algorithm to choose their headings.
(Which is sad, because the algorithm makes content nicely nestable. With the algorithm, I can take an article that was independent and use it as a section in a larger work, and the headings will automatically adapt. Though, as a pet-peeve of mine, nested IDs would also be somewhat necessary for this, so that it's fine to have two embedded articles which both have a section with an ID #introduction.)
The algorithm changed the visuals of headers used in semantics, that is, H1's in lower sections. But software beyond browsers like screen readers would need to add support for this logic too, so that H1's in a section were semantically treated as a H2.
By "outline" in this context I'm referring to the computed hierarchy of heading elements in the content. Not the styles.
What I meant is that removing the default styles is an admission of defeat, that we are giving up on the whole idea of automatically leveled headings - it's now definitely not going to be implemented by any software.