Red isn't a color, it's a spectrum. It encompasses a whole range of colors. You use it to describe a similar set of colors when specificity isn't required ("What was that red thing?" vs "I think it would look good in crimson"), like most things in English.
Until a few hundred years ago, pink things were simple "light red" things in English (and many other languages) - we didn't have the word pink and so couldn't express the colour without using relative terms.
They don't. "Red" doesn't exist as a concept except abstractly. Words like "scarlet" and "teal" have been used since middle English to describe colors.
In other words: it's not that English works the way he described (it doesn't), but instead the inverse: Hungarian doesn't have an equivalent for "red".
In other languages, that grouping is done differently, and two colors that would both be appropriate to call "red" in English don't have a single common color term at all.
To get a feel of how this looks from the other side, consider various Asian languages that don't distinguish green and blue, and have a single word that has to be translated as "green or blue" to English.
For English speakers, in everyday usage both are just "red." English has more specific words for red but we don't use them much.
This is a great example of why context-free machine translation is impossible. If you were to translate "red wine" as piros bor (instead of vörösbor) it would be ridiculous.