I hate to take an authoritative stance, but that reference simply has it wrong.
I can only imagine three things the notation 0.99\bar{9} can possibly mean with regards to the surreals:
(1) It is a "hyperdecimal" -- that is, a *
Z-indexed sequence of digits -- for which every place to the left of the decimal point is zero, and every place to the right of the decimal point is 9. This "hyperdecimal" is exactly equal to 1.
(2) It is trying to denote an "ordinary" decimal expansion of a hyperreal number -- but any nonterminating "ordinary" decimal
does not converge. As I mentioned earlier, a countable sequence converges if and only if it is eventually constant. A strictly increasing sequence, such as 0.9, 0.99, 0.999, ... (that is, \{ 1 - 10^{-n} \}_{n \in \mathbb{Z}^+}), does not converge in *
R, so it cannot denote any hyperreal number at all.
(3) The reals are embedded in the hyperreals. 0.99\bar{9} denotes a real number, which in turn is a hyperreal number. But this approach also clearly leads to 0.99\bar{9} = 1.
The surreal case is even stickier -- the surreals are far "too big" for
any sequence to converge in the ordinary sense... no matter how long the sequence was... unless it is eventually constant. So, I don't really have any idea what the author could possibly mean by trying to refer to a surreal number via a decimal expansion.
(of course, the real numbers can be embedded in the surreals -- so you denoting a surreal by a decimal expansion
can make sense if you say that the decimal expansion denotes a real number, and then that real number is in the surreals... but then clearly that would say 0.99\bar{9} = 1 in the surreals)
I suspect the author is simply confused by the fact that the sequence \{ 1 - 10^{-n} \}_{n \in \mathbb{Z}^+} does not converge to 1 in either the hyperreals or the surreals. This is easy to see in the hyperreals because, for any positive infinitessimal e, we have that (1-e) is greater than every term in that sequence. (But, that's not true for the sequence \{ 1 - 10^{-n} \}_{n \in {}^\star \mathbb{Z}^+})
Similarly for the surreals. We can construct a number "between" that sequence and 1 as being the surreal number:
s = { 0.9, 0.99, 0.999, ... :: 1 }
This defines a surreal number, which is strictly greater than each number in { 0.9, 0.99, 0.999, ... }, and yet strictly less than each number in { 1 }.
And then, I could look at { 0.9, 0.99, 0.999, ... :: s }, which is strictly less than s, and so forth.
However, this is a true statement in the surreals:
1 = {0.9, 0.99, 0.999, ... :: }
But this is misleading, because this is also true:
1 = {0.4, 0.49, 0.499, 0.4999, ... :: }
In both cases, 1 is the "simplest" number greater than everything in the left set, which gives us the equality.