So, having watched it a bunch of times now I think the issue is that the clock operator stopped the clock at 0.7 which is when Tatum's shot hits back iron initially. Then it bounces up, bounces off front of rim, and then KP tips it in. I had not seen it quite as clearly initially. There is no buzzer, no red light, no refs waving it off because the clock had stopped for the foul that occurred and was correctly called initially. One would hope that they note the clock operator was really bad here---there's definitely no basis for stopping the clock when the shot hits the back rim, the foul was whistled a second or so earlier. It would have been easier for refs if they let it run out, or stopped on the whistle. part of what makes the below sequence so tough is the odd stoppage point.
View: https://www.espn.com/video/clip/_/id/39662673
Then, they go to review and fabricate the overrule of the foul called on the floor.
But they have a practical problem: time in the real world didn't actually stop once the shot hit the back iron at 0.7. We all know this to be true. But, it may be the case (probably is the case) that had the clock operator not stopped the clock, had the foul not been called, time would have expired before KP tip-in. However....they have no basis for ending the game---there's no provision in the rules for taking time off the clock there. So they can't say "well, game would have ended". The clock never got below 0.7 and they have no provision to do anything about that.
What they probably should have done, based on the rules, is said "there was possession, so Celtics ball" and ignore the reality that time would have come off. That's a quirk of the replay rules and an overturn---they have this 'time stops' period where they don't have a clock running or way to intepret it. This is part of why several of us argued in the Indiana/Jaylen scenario it's bad policy to guess at what would have happened. But NBA interprets the rule differently and creates this 'stopped time' problem. I can't see any other rule that you could apply otherwise - you have to rule possession becasue it happened and you don't have a way to lower the clock. Even though that is an odd outcome from Cavs perspective - the clock would have expired. But since it didn't, they can't just eliminated the 0.7 seconds either. So that's a problem.
There are provisions for clock adjustment via review; however, the problem here is that while they CAN adjust it, they actually don't have any way to assess what to reduce it to---only to add it (which is an issue here in that even on the jump ball, the foul was at more like 2.1 or so, not 0.7). The clock had stopped, they can't just take a stopwatch out and say "look, that second bounce is when clock would have hit zero". So they neither added time to the 0.7 (which I believe they could do via the replay rulesm and they can calibrate by watching a replay with clock running and saying when it should have been stopped) or reduced it (which it is unclear they can do, or at least have any criteria to put on any other number). Effecitvely, they just threw up their hands on the timing.
So, in classic NBA "we don't need rules, precedent, or consistency we just try to figure out some way to rule something" fashion they split the baby: they take off the legit foul because, I don't know why. They don't award Celtics the ball, though. And then they rule a jump ball - which also would be impossble clock-wise. They don't add back the time from when the foul was called, and they don't arbitrarily guess a number below 0.7 to guess what might have happened had they let it run.
It's a really awful sequence on the merits---about as bad a 'refball' sequence with bad judgment and bizarre rulings that destroys the end of a game. But I do now see the prudential challenge they had---applying the rule correctly leads to an unfair determination from a Cleveland perspective (Celtics ball, even though clock likely would have expired). I kind of wonder if, in the light of day, the NBA will say privately that the better way to handle this was to uphold the foul call and let the players determine the outcome based on the free thow and whatever happened in the 2.1 seconds that would have remained had they correctly adjusted the clock for the foul.