It's a pretty funny assertion. The whole point of ML models is to take training data and learn something general from it, the common threads, such that it can identify/generate more things like the training examples. If the model were, as they assert, just compressing and reproducing/collaging training images then that would just indicate that the engineers of the model failed to prevent overfitting.
So basically they're calling StabilityAI's engineers bad at their job.
>>idle_z+(OP)
As a side discussion, is there any research model which tries to do what they describe? Like overfitting to the maximum possible to create a way to compress data. It might be useful in different ways.