I can see the ambiguity in what you've quoted, but it's clarified in the sentence that immediately follows it. It was referring to the "literate programming environment".
The definition of literate programming environment doesn't include the requirement of a GUI.
Knuths original literate programming environment consisted of a command line tool to split files that mixed pascal and tex into the pascal and tex source, to be compiled separately.
Which means that according to your definition, the original literate programming system, isn't literate programming.
I think you're fundamentally misunderstanding the architecture, capabilities and relationships between observable and observablehq.
Not having a button next to each cell to edit it in place, is not going to impact your productivity in any way, when you can just edit the cell in the window to the left.
Wether it's below or left isn't a meaningful difference, and shouldn't have an impact on wether or not it's a suitable replacement or superior/inferior to other notebooks.
Hope you'll look at it again in the future. In a sense it's your loss, so good luck and take care.