With a Pihole, you aren't preventing the device from reaching the internet, you're just refusing to provide it answers to its DNS requests. That means that it can't translate a domain name (example.com) to an IP address (1.2.3.4) using your DNS server. But there's nothing stopping it from using a different DNS server whose IP it has hardcoded, and nothing stopping it from then talking to anything on the internet once it has the correct IP to use.

In contrast, the other poster sounds to be using a firewall to apply ACLs. That means that the only way to reach the WAN is by passing over the firewall, and the firewall can apply rules about what traffic it allows. That prevents the device talking to a hardcoded DNS server, or talking to something on the internet if it alreadt knows its IP.

The other poster also talks about adding specific exemptions to these ACLs for specific services. So, e.g. letting the TV reach Jellyfin, but only Jellyfin & not all the other devices on the network. That reduces the risk of an attacker using the IoT device as a way to attack the rest of the network, since there's less stuff to attack. You're right that this is a fairly marginal gain for an IoT device which doesn't have WAN access anyway.

The downside of this approach is that the device enforcing the ACLs has to handle all the network traffic. That means it needs more processing power to take packets, apply the ACL rules and then decide whether or not to send it onward. The upside of a Pihole is that DNS is a relatively tiny amount of traffic, so it takes much less processing power to handle just DNS.