OK, having read things over a bit, here's my read.
The alien appears to have received an LC in MA, despite never having lived or worked there. The case got transferred to a local office for an interview, and at the interview produced some paystubs with an address in CA. The sponsoring company claimed that AC21 allowed them to shift the work location to "all across the US" despite the LC not containing this language. The local office decided to deny the case, claiming that this was not a new job under AC21 and portability did not apply.
The AAO overruled the district office. Essentially, what they said was that for the purposes of AC21, a change in job duties, location or employer was covered. This means that you can work in a city not covered by your LC, for the same employer, or a different one. It is a nice, reasonable broad interpretation of AC21.
What the AAO did do is say that the alien's original H-1B petition didn't mention working all over the US, so it may be possible that the alien violated H-1B status based on what was listed in the G-325A biographic info form; so there may be an "out of status" issue here. It's important to note that this case was not denied; and if the LC was approved on 6/1/01, there's a good chance that even if the alien was out of status, he is covered by 245i and is good there, albeit with a $1000 fine.
This is a great interpretation of AC21.