Surely, if a script is in a position to sniff the cookie from local storage, they can also indirectly use the http-only cookie by making a request from the browser. So really not much of a difference as they will be taking over the account

The cookie storage and the local storage by all means is not the same! Cookies are not stored in the local storage and could be httpOnly, so they are not directly accessible by JavaScript. Nevertheless, as described above, with this XSS attack it is easy to bypass the token and just steal the user credentials by pretending a fresh login mask keeping the origin domain intact. That's why XSS attacks are dangerous since existence. Nothing new actually.