The title is a bit misleading. The TAG simply noted this hasn't been thought all the way through, having all reasonable use cases covered. They didn't strike down the idea per se, just noted it hadn't been completely thought out. This is pretty much par for the course in the standards process.
The language quoted in the article sounds a bit stronger than that.
"we consider the First Party Sets proposal harmful to the web in its current form... this proposal undermines the concept of origin, and we see origin as a load-bearing structural pillar of web architecture."
