His code allows a small industry of private servers to run large population servers which drives sales of minecraft for people who show the game to their friends. He has a right to say, "Don't use my code". It's 23,000 lines so rewriting it will take time. And now there is a known risk that others might say "don't use my code" after his code is rewritten.
The number of players involved could be anywhere from 10,000 to 100,000 players.
You can run minecraft okay with up to about 6 people on the free server. But if you want to go over 6 people, you pretty much have to use Bukkit or Forge.
Mojang acquired the bukkit name and repository structure but not the bukkit source code. They also hired four bukkit founding developers and were paying them to work on bukkit. They may have acquired the code written by those four developers as part of the hiring agreement.
The bukkit source code was still open source, gpl, not owned by Mojang and could have been forked. But it relied on decompiled minecraft source code so it was really illegal from day 1.
In fact, if Mojang turned evil, they could kill bukkit at any time too with a built in poison pill. Not likely as that would be very player hostile.
The pressure on Mojang is really only towards new sales on the PC. Existing servers can continue to run on 1.7.10 for a long while but new enhancements are probably mostly dead. All other platforms (Xbox, PS3, PS4, Android) are uneffected by this issue.
Mojang has been working on their own server API seriously for about a year now. They might be able to focus on it and get it out in 6 months to a year. Especially if they retask those 4 bukkit founders purely to the minecraft API.
What it really seems to mean is that before you work on any GPL project- you better check it and anything it depends on for truly clean code. For really large stuff, that might not be possible. Also, things clear after the fact (writing based on copyrighted closed source code) may not be obvious to you before the fact. So there is just a risk to working on GPL projects.
A lot of other programmers who were writing mods are now dead in the water.
It's okay- most closed source stuff you work on doesn't last more than a few years either.
It's possible that the developers will move to Forge and Bukkit is dead even if this issue is resolved. Forge seems to be clean.