Yes, I got that email. The way I read it is after November 4 sellers will have to request payouts UNLESS they re-signup for scheduled ones.
On the balances: my guess is that the company did not get as many members spending their balances down when they added that option a couple of years ago. I know I didn't do it because they made it way too complicated (perhaps, as you suggest, for IRS reasons, who knows?) Now it seems like they are going to allow sellers to spend the money they make without the complications and hope they keep spending without realizing that they could have opted in again for scheduled payouts.