From what I can tell this is not what they’re talking about.
First, I inferred that this is an addition/modification to the current system, not a blatant replacement requiring you to ‘grind practice’ instead of perform ‘real world’ tasks.
Currently: Grinding action by action (turn by turn) is the only way you can ever gain skill in anything whatsoever (aside from reading books). This is practically the definition of grinding being mandatory.
Proposed: In addition to performing individual actions (which will increase skill/insight depending on what you’re doing)
You have skill, insight, and skill-rust, the longer you don’t do things relating to a given skill the more rust accumulates, this rust will quickly disperse once you start using your skill again.
If you have more insight than skill, you can practice until your skill increases, allowing you to skip the grinding of, for example, throwing 10,000 rocks at squirrels, or dis and re-assembling flashlights a hundred times.
I’m assuming you would gain skill and insight from actually utilizing said skill in a real world situation, such as killing zombies with a katana.
You would learn more about how sharp objects cut other things (and how the human body applies cutting force through sharp objects), in fact you’d probably learn more about cutting things than you are capable of utilizing, which is when your insight surpasses your skill, allowing you to train to a higher level of skill without needing to murder more zombies with said katana.