They are taking poor performance of undersized models and claiming that proves some fundamental limitation of large models, even though their own tests show that isn't true.
In the other test the perturbations aren’t particularly sophisticated and modify the problem according to a template. As the parent comment said this is pretty easy to generate test data for (and for the model to pattern match against) so maybe that is what they did.
A better test of “reasoning” would be to isolate the concept/algorithm and generate novel instances that are completely textually different from existing problems to see if the model really isn’t just pattern matching. But we already know the answer to this because it can’t do things like arbitrary length multiplication.
I don't think that LLMs are the end of AGI research at all, but the extreme skepticism of their current utility is mostly based on failures of small models. It's like 65% for most of the small models they tested and that is what they are really basing their conclusions on
The way I see it reasoning is actually the ability of the model to design and train smaller models that can learn with very few examples.
Yes, once the modules for reasoning have converged, it will take very few examples for it to update to new types of reasoning. But to develop those modules from scratch requires large amounts of examples that overtax its ability to memorize. We see this pattern in the "grokking" papers. Memorization happens first, then "grokking" (god I hate that word).
It's not like humans bootstrap reasoning out of nothing. We have a billion years of evolution that encoded the right inductive biases in our developmental pathways to quickly converge on the structures for reasoning. Training an LLM from scratch is like recapitulating the entire history of evolution in a few months.
This is also why o1 is not better at English. Math skills transfer to general reasoning but not so much to creative writing.