The logic is that if we should be able to detect orbital teapots but can't find any that it may indicate time travel is not possible, or at least never readily available for MIT students to engage in practical jokes. Because they totally would.

Like Roko's Baskilisk it relies on a lot of presumptions that we cannot immediately make. We still struggle to detect teapot-sized satellites in the inner solar system. Time travel may exist but may never be freely accessible. There may even have been a task force to intercept all the teapot-placement missions before they launched, or a good reason not to frivolously drop objects into the past such as teapots. We might even have evolved to where we just don't consider trolling each other as appropriate behavior.

As with many of my hypotheses, it's more of a thought experiment than an actual conjecture of the real world.