[happyguy43]

Kind of at a loss here:

Is the final analogy showing that relative performance on any given trial is mostly random?

Or is the analogy to reinforce his point that relative performance on subsequent trials is inversely related to the type of feedback given?

[brazzy]

Neither.

It shows that when there is a gaussian distribution of performance, then exceptionally good performance will, purely based on statistics, be followed by a decrease in performance, and exceptionally bad performance will be followed by better performance.

The point is that this effect will usually be much stronger than the effects of feedback, and if you naively analyse what kind of feedback works better, it will lead you to the wrong conclusion because praise is given for exceptionally good performance while scolding is given for exceptionally bad performance.