Lyxen
Great Old One
This is not true. He doesn't want group to mean individual. It's just that like me, he understands that groups are made up OF individuals. Groups(an adventuring party) can all make individual checks by RAW. If they entire group runs at a chasm and leaps over all at once, they do not make a group check to get across. Each one makes an individual check and some may not make it across while others do.
And that's absolutely fine and one of the possibilities that I was referring to when mentioning a "group check" whether it's the actual "group check" rule in use or not (and that depends on the skills and circumstances).
In the context of the surrounding text, the sentence you are hanging your hat on does not mean group check. It's clear from the surrounding text and the surprise rules the travel rules bow to require these passive perception checks to be individual.
Some can be, others can be done for the group. If you travel as a group, and you post sentries or have people specifically looking for threats, the intent is for the group to benefit from it, right ? Just as when someone is tracking, ir making a map, or foraging, and making checks, the expectations is that the group will benefit from it, even though they are individual rolls by the character.
So when you have someone assigned in the group to check for danger, you expect the result of his check to benefit the whole group. Are we good so far ?
And for me, in that context, that famous sentence just means exactly what it says: If someone is distracted, he has a passive perception check as usual (although, as discussed in the other post, it might be with whatever circumstantial modifier the DM deems fit) because that's the way the rules on hidden creatures say (amongst others), it might benefit him, but the group will not benefit from it.
Otherwise, it might just have been simpler to say "These characters don’t benefit from their passive Wisdom (Perception) scores for noticing hidden threats." This would have been much simpler than "These characters don’t contribute their passive Wisdom (Perception) scores to the group’s chance of noticing hidden threats." whereas this specific phrasing fits absolutely clearly within the concept of "group travelling" as the rest of the rules.
Note that, as a DM, it's still perfectly RAW to assign heavy negative modifiers if you think that an activity is especially engrossing. Or even auto failure, although as pointed out in the other post, I find this not only a bit unfair to the player and not within the spirit of the rules (adventurers are professional heroes), as does JC since he says that "passive perception is always on", so complete deprivation for me is really for extreme cases (and once more, JC says that it needs the character to be unconscious, which is a rather severe form of distraction).