Recent and related:
Future of .io domains uncertain as UK hands over Chagos islands - https://news.ycombinator.com/item?id=41788805 - Oct 2024 (17 comments)
Ask HN: What happens to ".io" TLD after UK gives back the Chagos Islands? - https://news.ycombinator.com/item?id=41729526 - Oct 2024 (204 comments)
UK will give sovereignty of Chagos Islands to Mauritius - https://news.ycombinator.com/item?id=41729325 - Oct 2024 (282 comments)
.io will cease to exist as a ccTLD, but it doesn't mean it can't exist as commercial TLD like .app, considering its widespread use. I think eventually it will be auctioned off.
According to current rules, it can't. Only ccTLDs have two letters.
As the article says, money talks.
IANA has documentation that outlines what happens in the retirement of a country code top level domain here: https://www.iana.org/help/cctld-retirement
tl;dr, if it happens, there will be a 5 year retirement period. We have quite a while to deal with this it seems. This isn't a nothing-sandwich, but pretty close (unless your company is something .io)
Im confused by this speculation as the .io TLD isnt owned by that country and it isnt disappearing...
It doesn't matter who "owns" it (the country probably outsourced management of it to another entity, I assume); the domain exists because it exists as an ISO country code. When the country is no longer a country, and the IO country code is removed from ISO 3166-1, the justification for the domain existing will be gone. The article is saying that per current IANA policies, that should trigger the domain to be retired over a period of several years.
Personally, I do find it highly unlikely the domain will go away. They'll do something to keep it around. As the article states toward the end, "The IANA may fudge its own rules and allow .io to continue to exist. Money talks, and there is a lot of it tied up in .io domains."
ISO 3166-1 defines codes for "countries, territories, or areas of geographical interest". When the country is no longer a country, the country it's becoming part of might very decide to treat it as something still deserving an ISO code and thus a ccTLD. (and such a status makes sense for pure geographical reasons, its >2000km from Mauritius)
I believe the reasoning is that the list was originally used for post, so far-flung regions of a country may have their own codes, even if they're not politically separate. GF, French Guiana, is a good example. Politically, it's merely a region of France, but it still gets its own code.