"Not everything is tradable": The price of the haircut will depend on many things (supply, demand, average salary of customers, taxes, etc.) but mostly on the overall CPI, which is made up of food, transport, and RE as explained in the article.
"Still, a large portion of what is traded is completely domestic": this isn't true for many countries, look at the trade-to-GDP ratio.
"Secondly, PPP is a real thing, and it matters." PPP only measures the price of things in different countries in one currency which is irrelevant for two reasons:
1. Prices are dependent on salaries.
2. Most people earn a salary close to the average salary of the place they live in; that is, not everyone is a digital nomad. It's nice to pay your piece of bread $0.5 but you won't go far if your average monthly salary is $100. So, PPP tells little. You must take average salaries into account when calculating standards of living and I don't think $2k is the average Thai salary. It's much more interesting to compare average nominal income divided by the CPI than to use the PPP for checking living standards. PPP is not even interesting for digital nomads as they're better off heading to low tax places rather than objectively cheap places. PPP is only interesting to choose your next holiday destination.
Finally, no, the number of people in an economy has nothing to do with the average salary. It all depends on how many people the economy needs, which depends on how advanced the economy is.
If you have an advanced economy with lots of different sectors (agriculture, manufacturing, energy, services, and high-tech) that exports a lot, you'll need a lot of people, in fact, probably more people than your population can create. This is why the US and Germany, despite being very big countries, are still searching for a lot of people to employ.
On the other hand, if your economy only has a few sectors that can be scaled easily and make no money (agriculture), then you will have a surplus of people, no matter how many people you have in your country.
That's why the US, Germany, France, Canada, Australia have a lot of people and high GDP per capita (they're advanced economies) while Bulgaria, Mongolia, or Georgia have small populations and low GDP per capita (they don't produce anything valuable).
