TLDR: Neovim did a breaking change to persistent undo
That wasn't the point.
The point was they did it in a completely stupid way and responded to a bug report about it in a way that suggested this might not be just the occasional stupid that we've all had slip into our code.
I think this might not be clear on the issue, it broke vim's undo file, as in it deleted it and replaced it with Neovims version.
Just by trying Neovim you can lose your vim undo file.
…and even trying Neovim out on a file permanently deletes your undo history for that file, even if you switch back to vim.
That is not the story here. The story is Neovim deleted data created by another program, on someone else's computer.
I don't know if this story is true, but you can't defend it when taken at face value.