I've never seen this. Usually you don't have the LaTeX source of a paper you cite, you wouldn't know which label to use for the reference, when the cited paper is written in LaTeX at all. Or something changed quite a bit in recent years.

Can you link to another paper's Figure 2.2 now, and have LaTeX error out if the link is broken? How does that work?

I assume they're referring to internal references. It does not look like they feed cited papers in to their tool.

Oh, ok. I had badly misunderstood the quote.