Possibly what's confusing you is that the statement refers to the surface of the sphere, not the space the sphere is sitting in. If we ignore relativistic effects (and the fact that the Earth isn't quite a sphere), yes the sphere is in a Euclidean 3-dimensional space. In that space all the convenient Euclidean things apply. But the statement didn't refer to the sphere, or the space it's sitting in: it referred to the surface of the sphere. The surface of the sphere is a 2-dimensional space, not a 3-dimensional one, and points on it only need 2 coordinates (latitude and longitude, for example).
To help see the difference, consider a straight line between London and New York. In the 3-dimensional Euclidean space in which the Earth is embedded, that straight line goes through the Earth. But if we're only considering the surface of the Earth, that line doesn't exist. The straight line (shortest distance between the two points) on the surface lies along the great circle. Now consider drawing the lines from both New York and London to, say, Capetown, to make a triangle. Yes, if you draw the lines through the Earth you will get a nice Euclidean triangle with angles that add up to 180 degrees. But those lines don't exist in the space you are considering: you can only draw lines on the surface of the Earth. The angles of the triangle drawn on the surface of the Earth add up to more than 180 degrees, so the space must be non-Euclidean.
Edit: The bit after the "but" just seems to be saying that for most purposes you can treat a smallish bit of the Earth as if it were flat. You probably don't need to worry about the curvature of the Earth when looking at a street-map of your town.