Short term memory is extremely different from lifelong memory.

For sure, but 'memory' as people think of it plays a fairly small role in chess - mostly relegated to opening preparation which is quite short term - watch any player, including Magnus, stream and they all constantly forget or mix up opening theory in various lines. But of course if you expect to play a e.g. Marshall Gambit in your next game then you'll review those lines shortly before your game.

Instead people think players have this enormous cache of memorized positions in their minds where they know the optimal move, but it's more about lots of ideas and patterns, which then show themselves immediately when you look at a position.

Watch any world class player solve puzzles and you'll find they have often solved it before 'you' (you being any person under master level) have even been able to figure out where all the pieces are. And it's not like they've ever seen the exact position before (at least not usually), but they've developed such an extreme intuition that the position just instantly reveals itself.

So one could call this some sort of memory as I suspect you're doing here with 'lifelong memory', but I think intuition is a far more precise term.

It is commonly misunderstood what STM is capable of. It is nowadays known that STM is crap on many levels and can only hold around around 3 items, and unreliably at that. Certainly not 7 as was proposed earlier.

Anything beyond that goes into LTM. It takes around 5 seconds to put something into LTM. If the test talked about here has more than 3 things to remember, LTM must be in use and will be a limiting factor.

Any differences between people at that point likely refer to their chunking capabilities, i.e. if they can reduce complex patterns to a single entity to remember (each of which takes ~5 seconds).

Source: Human Problem Solving by Newell/Simon.

This is not a proper test for chess memory. The point is that chunking is learned. A strong player has a single entity in their mind that describes a complex pattern. Magnus may have many more of these available than his opponents, letting him memorize and recall chess patterns more easily.

The same is not true for other things to memorize. "Memorizing highlighted circles on a grid" is quite different from chess patterns. So I don't think this test can be used to say anything about his relative capabilities.

Chess memory is not so rigid or limited. For instance another little demo from the same event had the players name what game a position was from, but the pieces were replaced with checker pieces. Nonetheless the players were easily able to do so.

This is why I said the test was quite adjacent to chess.