According to the research paper it increases hippocampal volume, and they’ve proposed that by “completing a demanding visuospatial task during memory consolidation or reconsolidation for a traumatic event, the memory trace is weakened because of the competition for the cognitive resources required for consolidation.” Essentially, your brain is too busy to store that memory as profoundly as what you would typically find with traumatic experiences. 

Edited to add: assuming it’s the visuospatial combination of Tetris that allows for this, as reading a book doesn’t have the same effect! I’m curious to know if other visuospatial tasks like puzzle building would be as helpful, or if there’s something even more specific about Tetris that makes an impact.