Yeah, from time to time we get hints from inside Valve that it's actually not 100% flat.
One example of this that stuck out in my mind was when Portal 2 was released...
Of course it isn't. There are still people with various amounts of power. People with power over budgets, power over schedules, power over information, power over talent, and so on.
The key is that one commonly misused chunk of power, organizational power, has been removed. Unfortunately it is also one of the most USEFUL forms of power for communication and authority. Without it you need to build your own little web of power, carve out your own little domain, and do more work than would otherwise be necessary. Yes, it avoids one of the problems where sometimes people in structural power will horde the power or refuse to relinquish it frequently, which is when the power is most beneficial. A good hierarchical system works best when used to fling information around rapidly, when used to distribute power, when used to enable people to do work.
I don't think I would like working without that. It would require either getting finding a guide to all the different power hubs or struggling for a while and discovering them on your own. SOMEBODY controls the builds. SOMEBODY controls when things get launched. SOMEBODY controls what features are included. SOMEBODY controls the design. SOMEBODY distributes tasks. SOMEBODY coordinates with QA and localization and ESRB and other groups. If you don't happen to know you are left groping in the dark.
It likely worked well in the beginning, but relying on that kind of hidden structure does not scale well, nor does it tend to last.