If not present in the model, the argument should be instantiated first and then added to the model.
The paragraph describes the following piece of code:
if (mavContainer.containsAttribute(name)) {
    attribute = mavContainer.getModel().get(name);
} else {
    // Create attribute instance
    try {
        attribute = createAttribute(name, parameter, binderFactory, webRequest);
    }
    catch (BindException ex) {
        ...
    }
}
...
mavContainer.addAllAttributes(attribute);
(taken from ModelAttributeMethodProcessor#resolveArgument)
For every request, Spring initialises a ModelAndViewContainer instance which records model and view-related decisions made by HandlerMethodArgumentResolvers and HandlerMethodReturnValueHandlers during the course of invocation of a controller method.
A newly-created ModelAndViewContainer object is initially populated with flash attributes (if any):
ModelAndViewContainer mavContainer = new ModelAndViewContainer();
mavContainer.addAllAttributes(RequestContextUtils.getInputFlashMap(request));
It means that the argument won't be initialised if it already exists in the model.
To prove it, let's move to a practical example.
The Pet class:
public class Pet {
    private String petId;
    private String ownerId;
    private String hiddenField;
    public Pet() {
         System.out.println("A new Pet instance was created!");
    }
    // setters and toString
}
The PetController class:
@RestController
public class PetController {
    @GetMapping(value = "/internal")
    public void invokeInternal(@ModelAttribute Pet pet) {
        System.out.println(pet);
    }
    @PostMapping(value = "/owners/{ownerId}/pets/{petId}/edit")
    public RedirectView editPet(@ModelAttribute Pet pet, RedirectAttributes attributes) {
        System.out.println(pet);
        pet.setHiddenField("XXX");
        attributes.addFlashAttribute("pet", pet);
        return new RedirectView("/internal");
    }
}
Let's make a POST request to the URI /owners/123/pets/456/edit and see the results:
A new Pet instance was created!
Pet[456,123,null]
Pet[456,123,XXX]
A new Pet instance was created!
Spring created a ModelAndViewContainer and didn't find anything to fill the instance with (it's a request from a client; there weren't any redirects). Since the model is empty, Spring had to create a new Pet object by invoking the default constructor which printed the line.
Pet[456,123,null]
Once present in the model, the argument's fields should be populated from all request parameters that have matching names.
We printed the given Pet to make sure all the fields petId and ownerId had been bound correctly.
Pet[456,123,XXX]
We set hiddenField to check our theory and redirected to the method invokeInternal which also expects a @ModelAttribute. As we see, the second method received the instance (with own hidden value) which was created for the first method.