"Buffett also says most people should steer clear of active investing"

Buffett's argument has always been that active management is overpriced, not that it is ineffective.

"Buffett, who makes a bid-ask market for the index, selling when it’s above his estimate of fair value and buying when it’s below fair value."

Buffett cannot do this. He is the only active trader. There is no price but the price at which Buffett last traded. Consequently, the market is never mispriced unless Buffett makes it that way. how does "the market" become undervalued? the market is all active traders, you said so yourself.