It varies somewhat from country to country, but at least in the US there is ample case law that says it's legal. The relevant ruling is typically based on the work being transformative and therefore a fair use for a derivative work. This is E.G. how Google can get away with creating thumbnails of websites to show on their search pages without needing to worry about copyright of anything contained on that website.

This article proved absolutely nothing except that you can use generative AI to create images that would most likely be ruled to violate copyright. Once again though, the model and training weights do not violate copyright, they're a protected derivative work. The generated image on the other hand very likely does violate copyright.