I had to do this for a Unity game which had a similar "custom" light solution, and on lower end devices it was a problem. It was easily solved using a simple spacial data structure, but doing it the naive way did present some issues.
I've written a lighting system exactly like this one (it's a very common 2d lighting concept, basically any sprite-based game with dynamic lightning will use exactly this). The only difference was that I used 24 light-direction frames instead of 4 frames because I was pre-rendering 3d models to 2d sprites, so I didn't have to have an artist draw each frame but could just export any level of precision, limited not by the artist but by filesize/memory.
The calculations he's talking about are as simple as it gets and were never really a problem for me even on low-end machines. (I was building a top-down space rpg, basically any of the 100 plasma discharges, engine exhausts, particles etc was a dynamic source of light)
100% supposition.
But that doesn't seem to be their concern here, either. Optimizing broadphase collision is a well-understood problem, and the scenario of finding the nearest is only slightly different from that.
I wish they'd let you in on a little more. Because my numb mind says this isn't something you should ever need to optimize. How many light sources do they have, dozens at most? And how many sprites? Dozens/hundreds? That is nothing.. what is this heavy math? I figured all they'd need is a vector from light source to object, and the vector's magnitude.