I may be mistaken, but I don't think it's possible for an iOS app's keyboard to become the "system" keyboard. In other words, you could make a text-editing app with a keyboard using this feature, but it would only be usable within that text-editing app.

You are totally correct. On android, however, its another story and something like this could be implemented and used on a "system" keyboard.

I don't think he meant as a global replacement. just a custom keyboard for within the app as a demo

That's right.