''Chaining the diodes together means that if one goes out, the whole circuit does, ...'''
Has someone forgotten the principle of parallel connections?

Nik....I think it was thought of a relatively benign issue since LED's are supposed to last 100,000 hours or more. It's other components thought that causes the failure more than the LED's, but the result is the same.

"To overcome that, a team at KIT's Light Technology Institute developed a method to inter-connect the LEDs that allows for the circuit to stay lit up if individual diodes fail. "
So...they caught up with the Christmas Tree Light industry? ;^)
Seriously, what they need to work on is lifespan in warm climates. A couple month of 100 degree weather really sucks the life out of these things.

Doesn't the heat help in the winter when ice and snow can build up?

So - this is my field. Parallel connections would mean you would have a drive current of perhaps a quarter to half an amp per LED X # of LEDs, all at ~3 volts DC. That means for a typical 150-Watt streetlight module, you'd use 50 amps at three volts, into a hundred or two hundred LEDs in parallel - not an easy current to handle.
A typical arrangement is say, seven strings of eight LEDs in series per module. This gives a forward voltage of 24 volts, and the current is split seven ways.
Also - typically, "flip chips" are used so that 90+% of the time LEDs fail, they fail "short" - or conducting.
No issue with the "120 Volt maximum" in the US - outdoor fixtures using Philips Xitanium 150-Watt drivers at 350 mA typically run at 450-500 volts DC.

they know all about parallel connections and the problems of powering LEDs that way, that's why series connections are pretty much the only way to go. it sounds like a major achievement to me.

hehe.. not only that... but heat is also often required to keep snow/ice from building up on these things. Make them too cool.. and you could have more trouble than you realize. You might have to actually build in a heater, and that too.. could fail... if not well designed...

The push for LED streetlight is premature. This 'next great thing' is not yet supperior to the current best streetlight, the low pressure sodium. LPS has better all in luminous efficacy and efficiency (approaching 30% where the best LEDs are around 20% when necessary electronics are included. On top of that LPS are less disruptive to wildlife and to astronomers. Need to replac3 street lights in your community? Don't get sold a bill of goods and end up with an inferior product. Save money and get the time tested Low Pressure Sodium steet lights.

I don't think snow/ice is that large of an issue anyway because the light is usually on the underside of the fixture. It would seem silly to intentionally build them to waste energy into heat with this in mind. Even if it were an issue a surface doesn't have to be hot to the touch to melt off snow, it only needs to be above freezing.

ALL of the low-cost LEDs I've bought for my home in the past 10 years have been series or series/parallel, Nik. I'm really surprised to find that all these -very- expensive LED streetlight modules have been made that way, too. Many were made that way to run on straight 120volts A/C. Watching some of the Russian dash cam videos on Youtube, I see what tough lives these pole lamps live and would wish for replaceable modules so I didn't have to replace the entire light fixture. ;)