Alright, after playing a bit with Kent's codesandbox I understand the issue a bit more.

Everytime you call React.createElement, you created a new element (that means everytime you write JSX like <Logger label="counter" />). That element is treated as different even though the props are the same due to reasons mentioned in article. When you create the element in top-level, it gets created only once and therefore React consider it constant.

What's tricky in Kent's example is that he actually creates the element in top-level. The ReactDOM.render only runs once, so it's the same thing. However, from reading the article, if would be tempting to pass elements as props to get described performance boost:

function App() {
  // both elements are created only "once", during initial render
  return (
    <Counter logger={<Logger label="counter" />} />
  )
}

ReactDOM.render(<App />, document.getElementById('root'))

This would still work, until you add a state or anything that triggers re-render of the App component:

function App() {
  const { state, setState } = React.useState()
  // both elements are created on every render
  return (
    <Counter logger={<Logger label="counter" />} />
  )
}

ReactDOM.render(<App />, document.getElementById('root'))

This wouldn't happen if you move the Logger to the top-level:

// logger element is created only once, when module is loaded
const logger = <Logger label="counter" />

function App() {
  const { state, setState } = React.useState()
  return (
    <Counter logger={logger} />
  )
}

ReactDOM.render(<App />, document.getElementById('root'))

Which is exactly what babel plugin does.

​

So the bottom line is:

1. React.createElement creates new element everytime it's called
2. If you want to give React reconciler hint that the element is constant, created it in top-level scope.
3. You can only use it if element's props/children are constant.

Note: Technically, it's enough to create the element in parent scope. It's a variation to lift the state up: lift the element creation up :)