That's exactly the point. It's a state (that of being boiling) that matter (some water) is in. Which is not the same as "state of matter", the compound word that is in the dictionary.

In talking about the validity of the suggested compound word "boiling water", an example of exactly what the article is talking about arises: when exactly does a sequence of invididual words (state, of, matter) become more than the sum of its parts?

A further question raised by your comment is does the existence of a compound word with a specific meaning then rule out use of the same words in a less specific manner? Perhaps for maximum clarity of expression, it's confusing, but is it wrong? It's an interesting point because if you didn't know the special meaning of the compound word "state of matter" then there is a word out there that is, completely unknown to you, invalidating your writing which would otherwise be correct both syntactically and semantically.

The general consensus among the HN crowd here seems to be quite vehement that "boiling water" has not reached the point where it "deserves" a dictionary entry. But there are words in many dictionaries like "cherry blossom" that I would say are little more deserving.