It´s interesting how we can read the same thing but not read the same thing.
I don't think he meant what you think he meant. Otherwise bitcoin would have no issue right now with, say, 20mb or 100mb blocks. But it does. They won't work in real life. Unless of course you put Bitcoin in 5-10 data centers and then, yes, it'd work. Until the gov comes down and raids the data centers. That would be "awesome"...
Now that i think about it, we might never need a fee market.
Say we don't have fees.
What's stopping me from instering 500 Terabytes of spam for the lolz into the blockchain. Would everyone have to pay the cost of my spamming?