From the research paper linked from the article, here are how the kids scored in different contexts:
calculating prices in the street 98%
solving word problems on an exam 74%
solving abstract problems on an exam 34%
This would suggest that applying concepts is more important, physical context less so.
Mind you, this is an extremely difficult experiment to carry out scientifically and is open to many interpretations. I would at least want to see it reproduced before giving it much consideration.
The experiment was later reproduced by Stephen J.Ceci and Antonio Roazzi. See “The effects of context on cognition: postcards from Brazil” Stephen J. Ceci and Antonio Roazzi, in “Mind Context” Sternberg R. J. and Wagner K. eds. (1994), page 78
Mind you, this is an extremely difficult experiment to carry out scientifically and is open to many interpretations. I would at least want to see it reproduced before giving it much consideration.