Alright before this speculation gets out of hand (and believe me, this article is way off base with its story!!!), let me explain this concept.
With Qantas' switch of reservation system, there are alot of behind the scenes changes that have taken place. One of these new concepts is called 'Theoretical Seats,' and believe me when I say that it is an excellent idea in theory, but it will take some time to iron out the issues Qantas is currently going through. Basically, Qantas has setup a list order (call it a value) of each pax for each and every flight (as well as values for individual seats on an aircraft). The ranking order takes into account FF status, PNR associations, SSRs, booking class, etc.
So, behind the scene before a pax even shows up to check-in, the system has allocated 'theoretical seats' for EVERY pax on that flight, depending the ranking order. What this means is that a pax with a high ranking order will have access to almost every seat available on the flight. A pax with a low ranking order will ONLY SEE SEATS THAT HAVE NOT BEEN BLOCKED BY THE 'THEORETICAL SEATS' FOR HIGHER RANKING PAX. Generally, if a flight is booked full (oversold), a low-ranking pax will see maybe 1 or 2 seats, or none at all available to them.
What this concept tries to do, is give pax with FF status, higher fare tickets, etc. better seats on an aircraft when pre-assignment is out of the question (QF doesn't pre-assign domestic seats, same for intra-Europe flights and Eurpoean carriers). Now, the issues that QF has had with this function relate to the way in which it had set up the ranking of pax. Families were checking in for flights and being spread out throughout an aircraft, and FF bookings (for status pax) were showing up at the bottom of the ranking order. QF has since fixed a lot of these issues internally, and regarding the article in question, THIS HAD ABSOLUTELY NOTHING TO DO WITH BUMPING PAX. ZERO, ZILCH, NADA. I'm not sure where that idea came from.
Now, the most difficult as you can imagine, is a check-in agent trying to explain this to pax as they are checking in bright and early for a flight, and not being allowed to access an open seat. It's a very complex situation, and not an easy one to explain.
So, hopefully that sheds some light onto the issue, but I would definitely take the article with a grain of salt, because there is very little valuable substance to it.