The point is that someone who spent 300$ to be in the exact same situation as they were before but the gdp seemingly is doing well. So they could have had a window and a sofa but only have a window in the example. So the gdp is increased but the people are not better of.

This example also cuts into personal efficiency going up. Not needing a car or burning gas because of a badly insulated house is negative for the gdp but good for the wealth of individuals.