For anyone just reading the title: It's about physical thin-client X11 server machines, not xterm.
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But sure, the definition of "X terminal" here is meant to mean dedicated hardware that runs an X server connecting to a remote X11 display manager, and nothing else. Those were always somewhat niche, in the same way that once terminal emulators existed, general purpose PCs displaced hardware terminals.
In the 1990s, my university used inexpensive diskless X86 PCs running X386 (predecessor of XFree86) with just a ramdisk, booted by DHCP / BOOTP / TFTP.