I think the key difference here is that the "init" is actually the process scheduler, and each of those managed processes is actually an "init" for its own children, and so on. Kind of like running a VM inside of a VM inside of a VM inside of a VM, but with less VM-specific baggage and more process-related baggage.

No, init still relies on the OS scheduler to switch between it and each of its child threads

Except that you'd have, to example, run the network stack as a process. What he's describing is closer to a microkernel than anything.