The example referenced above is:

https://output.jsbin.com/suzolaq

SVG elements paint atomically, so they are similar to stacking contexts in that respect. However, they are perhaps even more like replaced elements, in that they paint atomically but don't paint-as-if stacked (see here for more research into that latter concept). Replaced elements generally paint as foreign objects/documents embedded within a parent document. Under either the "stacking context" or "replaced element" reasoning, we would conclude that an SVG element should create an isolated group.

However, there may be use cases where developers want to blend SVG with the parent content, and forcing the SVG element to be an isolated group would disallow that, without a clear benefit that I can see other than possibly reducing developer confusion (though I don't know of any examples of this confusion right now). If the developer desires an isolated group, it's easy to add with isolation: isolate: http://output.jsbin.com/suzolaq/2. In addition, Chromium and WebKit browsers agree on this particular behavior.

I conclude that we should edit the spec to clarify that embedded SVG elements within an HTML document do not by themselves create an isolated group.