Certainly launch has to advance a lot for this to make sense. SpaceX is betting big on Starship getting close to $100/kg. But does satellite tech have to advance much at all to make this work? SpaceX has already successfully deployed one megaconstellation into orbit and it's extremely profitable. Isn't this just another Starlink with bigger solar panels and radiators?
Yes it has to advance a lot. In a DC all your supporting equipment has returns to scale and can be repaired if it breaks. If a GPU breaks, a sysadmin walks over to the offending rack and swaps the card. In space all that equipment serves just a few cards (this is more like orbital server racks) and it has to work in space (so instead of using an ~infinite heat sink like the Earth, you use radiators etc). We still don't exactly know what effect radiation in LEO would have on stock GPUs - IIRC the experiments to determine this started after Elon went all in on orbital DCs. If anything breaks, you have a flying brick.
This is why that calculator, even under extremely optimistic assumptions for orbital, and even if you assume launch is zero, still cannot make it competitive with terrestrial.