He means the 5 volt regulator/supply.
I wouldn't muck about using diode drops. It will work, but the voltage will vary with current, temperature, and the supply voltage. It will probably still stay within spec, but a 5V to 3.3 V LDO regulator is such a standard item you should just use the right thing. Using diode drops as voltage shifters has its uses, but to 'regulate' a logic supply should only be considered a hack and last resort.
Absolute maximums are the safety limits. Exceeding them voids all specifications for the device permanently. Operating limits are the limits under which the device performance is tested or guaranteed. Exceeding them voids all specifications for the device temporarily. The purpose of absolute ratings is to tell you things like how much overshoot your power supply can have at switch-on.