Those limits only affect Xbox Cloud Gaming (streaming to phones, browsers, tablets, etc.). Console play stays unlimited like it is now.
Pretty important caveat.
I imagine the biggest driving factor behind this decision, much like many of the gross changes occuring lately, is to have another product/service that they can use to justify their ridiculous AI infrastructure expenditure.
I think it's the other way around. Cutting back on a money losing service that is using up valuable bandwidth in data centers.
Cloud gaming is clearly a flop, if it was going to take off it would have years ago at this point.
There should be laws in place protecting customers from changes made to services you already paid for the year. There should be a long heads-up on changes like this. Last year, Xbox changed some rewards, such as reducing Fortnite V-Bucks for Game Pass. This year, my plan removes more.