The document is too simple and too naive to make people understand!!
The scale is lossy because it’s not accurate due to the need to multiply out the scales of all of the parents. It’s only wrong if on or more of those parents have different x,y,z scales and are rotated - if their scales are all uniform then it is indeed correct.
So parent has scale: 0.1,0.5,0.4 - lossyScale will be close but not necessarily perfectly accurate depending on rotations.
Parent has scale 0.1,0.1,0.1 - lossyScale is accurate.