You’re correct that the significance was that the government’s admission at argument revealed that it did not have a robust principle for distinguishing between the political movie at issue in that case with books.

I don’t recall the details, but I’m sure it came up in the opposition’s briefs. But in a brief you can paper over a thin argument to an extent. You can accuse the opposition of invoking a slippery slope, spend a lot of words making subtle distinctions, etc. It’s certainly fair to say that parties’ briefs often overstate the gravity of the consequences one way or another. So upon reading the briefs, the response might seem quite plausible. But when you’re forced to give a succinct answer to a direct question at oral argument, that kind of evasion falls apart and you’re forced to fully own the implications of your position.