I think Yegge was deliberately obtuse with the marshmallows until the very end. He finally reveals that they represent eating your own dog food, i.e. a company

I think Yegge was deliberately obtuse with the marshmallows until the very end. He finally reveals that they represent eating your own dog food, i.e. a company using its own tools whether they're best for the job at hand or not. Programmers whose productivity has been killed in this way are the mangled sheep, or marshmallows with ketchup.