Meh; I agree with that advice for many situations, and playing "tough guy" has nothing to do with it.
You're missing the prereq of building some skills at dealing with people -- not "confronting" them, not attacking them (verbally or physically), but by simply showing them simultaneously that you have a spine but no chip on your shoulder. Then you give them a clean way out of the "misunderstanding" (or sometimes an actual misunderstanding). It's all psychology, and practice.
I'm not an expert at this, but I see people around me all the time doing it so disastrously wrongly that I feel like an expert just by comparison. I have two neighbors (two middle-aged couples) who have been miserable for a couple of years now because they had a minor disagreement (one's improperly-connected waste water system was leaking into the others' property) which they "addressed" by only going to the authorities -- via lawsuits, petitions to regulatory boards, etc. -- instead of resolving it between themselves.
In the end one of them "lost" and one of them "won", but they're both stuck living next door to someone with a virulent hatred for them.
If either side had any real skills at managing conflict this would never have happened.
Most conflicts that happen do not need to involve the authorities -- especially the ones that start small and escalate until the authorities get involved (intentionally or not).
The bar to what kind of conflict merits appealing to authorities first (instead of direct dealing first) is higher if you're in prison, I imagine, but still -- most everyday conflicts start below that bar.
Interpersonal conflicts with co-workers, non-scary problems with neighbors (more "they make a lot of noise at 2am" than "they set my dog on fire"), vandalism, etc..
Another example -- while my wife was in school we lived in a slightly rough neighborhood, and once someone threw a large rock at the front of our house... something about as heavy as a few bricks. It would have easily shattered the window, if it had hit it; instead it broke a bit of siding dropped onto the porch.
I could have hidden and called the police; I could have run outside screaming and threatening the kids that were around. But I thought about it first. I was a faceless white guy to them -- at work much of the time -- and someone was showing off how bad they were and attacking my house.
So instead I went out and spent 20 minutes making myself not a faceless white guy. I talked to everyone I could find -- mostly kids, a few adults -- and just explained what had happened, explained that I wasn't trying to find who had thrown the rock, just wanted to be sure everyone knew what had happened and that it was a dumb idea. I was a dumb kid, once; my dumb mistakes had included setting an empty house on fire, accidentally; so I knew how this kind of stuff happened, but it needed to be stopped before anyone got hurt.
I met a bunch of people (and talked about lots of things other than rocks thrown); afterwards it never happened again, and I felt a hell of a lot safer than if I had just stayed in the house and called the police (who wouldn't have been able to do a damn thing anyway, of course, except their presence would have turned me into a faceless, scared white guy).
All of this has little to do with snitching, with rich/poor (though that is relevant to how useful the authorities are to you, of course...), and more to do with the respect you get for honest dealing, if you can do it intelligently.