For the argument of the sqrt (n) itself, see the paper.
Edit 1: Quote: "Assuming that T [random path length] is chosen large enough to achieve perfect mixing, sqrt (n / (c−1)) replicas would need to be created in order for a GET request to succeed with about 50% probability according to the birthday paradox."
Edit 2: In a world without local minima the term itself will be 1 (you only need a single lookup and will find the value with 100% probability. In the restricted route scenario you will have to so O(sqrt(n)) lookups.