You are right @yoelvis that a principle of Redux is not mutating state. Earlier in the Redux section, they explain that we are not worrying about making non-mutating changes to state yet. In this challenge state is not an object but a string. To make a change to this state without mutating we would use the concat() method. But the state is not initialized yet.
(state = 'Initial State', action)
This is a default value syntax that is used here. Because the state is not assigned any value anywhere else I think that the state will only be assigned this default value if the switch statement runs and a value is not assigned to it.
So I think that we are not mutating state in the exercise. But I am curious because it definitely felt like I was mutating state when I first completed this challenge.