I'm not sure which one they're talking about, but two blackouts in Cabaret come to mind. The end of Act 1 when everyone is singing "Tomorrow Belongs to Me" and Cliff, Sally, and Fraulein Schneider look on from the stairs in horror. Then the emcee comes out in front of the orchestra, turns his back and moons the audience with a swastika on his butt, and then a blackout. Or the end of the show when the doors go away and the emcee and the entire cast stand in front of this huge white light, while the emcee reveals concentration camp clothes, and then the lights go out.
My favorite blackout is the end of the "If I Love You" scene from Carousel. I watched the video at Lincoln Center a few weeks ago (one of the most phenomenal productions I've ever seen, but that's another thing) and the way the blackout is done is incredible. Julie says her line, "It's just their time to, I reckon" and then she and Billy kiss passionately, practically in a death grip. The lights around them go out with the exception of a spotlight on them. As the music continues, the hill they are on slides back and the spotlight tightens in on them. It continues until the final note, when the spotlight tightens exclusively on their faces kissing, and the hill is all the way at the back of the stage, and then the lights go completely out. The same effect is used at the end of "What's the Use of Wond'rin" with Julie on the island.
"Sing the words, Patti!!!!" Stephen Sondheim to Patti LuPone.