It’s a long essay, I’m paraphrasing.
Rothbard’s fundamental premise is the idea that each individual owns themselves and the property they create through their efforts. Nobody creates matter, we transform it, and through that transformation we create value. The sculptor doesn’t create the rock, but transforms the rock into a sculpture through effort.
For land, the mixing of one’s effort to improve and live on it is called homesteading. Rothbard’s homestead principle is that whoever uses/improves/lives on otherwise unowned land becomes its owner. No one else has authority over that land.
So if property (land or other) is stolen by anyone (the State, petty criminals or other), the property still belongs to the victim. That is, the victim holds title and is entitled to the return of the property.
As long as the thief and victim both live, it’s a simple matter. The thief must give back the property (and face possible additional punishment, which is out of scope for the essay).
The problem becomes more complex as you consider the thief’s heirs, the victim’s heirs, and, crucially, the case where the victim and all the victim’s heirs are either unidentifiable or deceased.
To your point, it sounds bad to say that the thief’s heirs get to just keep the property if all the victims’ heirs are gone. But what is the alternative?
In an anarcho-capitalist frame (of which Rothbard is a paragon) there’s no one else to whom to appeal. There’s the thief, the victim and their respective heirs. Anyone else is merely a disinterested third party bystander.
To get any other outcome, one would need to submit to a class-based society, where members of some class hold superior title. For example an aristocracy, monarchy or other State, which claims the right to adjudicate these kinds of disputes and who’s word holds sway.
In order to have a free and equal society without rulers (anarcho-) and with private property (capitalism), the least-bad option seems to be to have deceased victims’ property return to nature to be homesteaded/salvaged by the next person who comes along. In the unfortunate case of land theft that we’ve been discussing, that would be the thief’s heirs.