This is a strangely written text. In a practical setting, the way to get oxygen concentration is by sending an organic sample to a lab for an ultimate analysis. The ultimate analysis chemistry is explained elsewhere.
The highlighted text seems to describe anoxic pyrolysis of organic matter well above 450°C (for coals this temperature may be higher). Pyrolysis proceeds as follows.
$$\ce{Organics ->[heat] syngas + tar + char }$$
If any molecular oxygen were present in the system these two reactions would very quickly happen.
$$\ce{Organics + O_2 ->[heat] 2CO }$$
$$\ce{2H^+ + O_2 ->[heat] H_2O }$$
The syngas contains elemental oxygen mostly in the form of $CO$ and $H_2O$, however, other gasses like $CO_2$, $H_2S$, and perhaps even other hydrocarbons may be present. For the sygas to have most of the elemental oxygen as opposed to the char or tar phase high temperatures exceeding 450°C is important.
If the syngas containing the volatilized matter is passed over a bed of hot coal around 900°C then several things happen.
- Complex particles break down (hence the lysis in pyrolysis.)
- The gas stream picks up elemental carbon from the bed of hot coal.
$$\ce{CO_2 + C ->[heat] 2CO}$$
$$\ce{H_2O + C ->[heat] H_2 + CO}$$
By this point, if the temperature is hot enough, all but perhaps an insignificant fraction of the elemental oxygen will convert into $CO$.
Testing for $CO$ is done with the iodine pentoxide test.