This is explained in the article in a bit more detail. The point is not that the type system does something with the actual value - the point is that it would be impossible to create any code that results in such a value (other than null), since then you would have to provide an actual type that is somewhere between Integer and String - and that would obviously not pass the type checking. Using null avoids that.

Section 4.5 in the language spec deals with parameterized types; 4.5.1 deals with wildcards. Of course, there is no example in the specs that clearly points out what happens in this example - otherwise this wouldn't have remained undiscovered for so many years :)

If you can show, using the rules in the spec, that the sample program shouldn't pass type checking, then you'll have proved the article wrong :-)