To be fair, Linux evolves a lot since then. It's not as monolithic as it used to be - it has layers, modules, subsystems (vfs, usb), interfaces.
Linux essentially is made stable by the sign-off/code-review/sub-system maintainers which keep the code quality high.
Properly I would think it should refer to program structure, and how well independent pieces of code are (logically) separated and able to tolerate failures in eachother.
Here it's just being used to mean "single unprotected address space", where a particular class of bugs (memory corruption) can cause arbitrary problems in completely unrelated code. Would this mean that a kernel written in some managed memory-safe language (I think msft has an experimental C# one) cannot possibly be monolithic?
It is also a great story. The young boy outshines the great scholar.
I still think that Tanenbaum might have been right. But the forces of the open source movement were too great, beyond our wildest dreams and were able to overcome any design limitations. Also, Linus did an epic job technically and controlling the forces unleashed.