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I think the key part of the quote there is “edge of your capabilities.” Think of there being three zones of skill – a comfort zone, where things are easy and well within your existing capabilities (like when you’re practicing something easy slowly), a “stretch” zone where you are at the edges of what your current skill level supports (like playing something challenging at tempo), and a “panic” zone where you are going way beyond what your current skills support (like playing something that is too difficult for you, at a tempo you can’t maintain, without enough time to prepare, in a make-or-break situation).
Practicing inside your comfort zone is not the most productive use of time, because you’re not learning as much. It’s like going to the gym and lifting weights that require no effort. You’re not going to gain much from your time. Of course, trying to lift weights you can barely even get off the ground is not particularly helpful either. The “sweet spot” is that place just outside your comfort zone that stretches you a bit and forces you to rise to the occasion, to adapt to the new demands (technically or musically) that you have placed on yourself by moving closer to the edge of the kind of playing/music-making that your current abilities can support.
