I guess the thought is that people wanting free stuff may not think to look on Steam, and might only look for torrents.
It's possible that the dev could have done better by finding other avenues to advertise that didn't involve giving his game away for free.
This article is also not saying that this is the only way to increase sales.
No claim was made otherwise by this article.
The developer here does have the benefit of people saying specifically that offering a free copy (not a demo version) resulted in the sale of a legitimate copy which otherwise would not have been sold.
The point of this article is to give you what could be some surprising information; that giving away a game can, in at least this circumstance, can lead to additional sales.
Personally, I think it's an interesting idea for small developers because it's free publicity. Many people only pirate games, many never pirate games, and both talk to each other about games they like. Making a game available to pirstes before it's popular enough for someone else to do that means they get more eyes on the game that probably wouldn't buy the game anyway, but will recommend it to people that may buy the game if they hear about it.
This probably wouldn't work very well for popular game studios because they already have the marketing done, but it may work for smaller studios. I may consider this if I ever get around to finishing a game, largely because the potential negative is very small (this is a hobby, not my living) and the potential upside is large. And you can always add more content to the game that isn't in the torrent if it gets popular enough to try to capture the business of those on the fence.