My takeaway is that danluu is saying that, at the small scale, people understand how individuals contribute to teams. But at the large scale (like the HR department) we don't.
At the small scale, we're able to apply systems thinking - a team can be viewed as a system composed of a set of interacting parts.
However at larger scales, systems thinking becomes unwieldy - the interactions increase quadratically. There, we fall back to the Law of Large Numbers [1].
"Fungibility" and the related failures arise as a result of this.
The law of large number works well for some things (say, shoe sizes) and fails to work for others (e.g. income distributions, which follow a power-law).
So it's not odd at all that it would fail to adequately account for people. It's just sad we don't have anything better. Can't we find something better?
At the small scale, we're able to apply systems thinking - a team can be viewed as a system composed of a set of interacting parts.
However at larger scales, systems thinking becomes unwieldy - the interactions increase quadratically. There, we fall back to the Law of Large Numbers [1].
"Fungibility" and the related failures arise as a result of this.
[1]: https://en.wikipedia.org/wiki/Law_of_large_numbers