You're correct: it isn't an unlabelled system, and the article author is deeply confused about basic topics in artificial intelligence.
What he's trying to talk about is "this is an unsupervised feature detector in a large dataset which is only categorized, and where no human has provided correct answers up front to verify progress."
The reason this matters (and it doesn't matter very much) is that that means that in cases where it's prohibitive to provide training sets, such as where you don't know the good answer yourself, or where giving a decent range of good answers would be difficult, this sort of approach can still be used.
"isn't that basically equivalent to labeling them?"
Yes. It is. The original poster is confused.
What he meant to say was "there is no training set."
The article authors of the paper? How can you say they are deeply confused - have you not seen their previous work and presentations? Everything else you say I agree with.
What he's trying to talk about is "this is an unsupervised feature detector in a large dataset which is only categorized, and where no human has provided correct answers up front to verify progress."
The reason this matters (and it doesn't matter very much) is that that means that in cases where it's prohibitive to provide training sets, such as where you don't know the good answer yourself, or where giving a decent range of good answers would be difficult, this sort of approach can still be used.
"isn't that basically equivalent to labeling them?"
Yes. It is. The original poster is confused.
What he meant to say was "there is no training set."