They're talking about launching a million satellites, not one massive satellite.
I don't think they can avoid a Kessler cascade at that scale, but if launch costs were cheap enough (questionable because Musk habitually overpromises and underdelivers, but not inconceivable as sometimes he succeeds too) then patterning each of those million on Starlink satellites is essentially viable.
The thing is, the infrastructure needed to power and cool each of those satellites makes it economically absurd given that what they collectively do can also be done by a few data centers on earth.