I agree that it was a short-sighted move that will cost more in the long run. Even if they did it because DME wasn't keeping people on property anymore for the entire week, they failed to grasp the very simple concept that DME (and 60-day Fastpass windows, and EMH) helped to get people to book hotels on property in the first place. Without DME (or those other perks), it's a slippery slope... we have to pay for all our transportation now, so we might as well rent a car... and if we have a car and there's no touring advantage to being onsite, we might as well book a hotel off-property that's both better and cheaper than Disney... and since we're going offsite every day, let's take some of our meals off-property and save some money... and since we don't need a hotel and ticket package, we'll buy our tickets more cheaply from a third-party seller, too...
And so, due to just a couple of penny-pinching business decisions, families like mine might still be coming to WDW (because, darn it, we still love the place even though our affection sometimes feels one-sided), but Disney will be getting 25-30% of what we used to spend when we stayed and dined almost exclusively onsite. DH and I have already looked at the pros and cons, and have decided that our short August WDW trip (this year, so still with DME, and admittedly staying onsite with the "extra days" ticket offer) will be, to borrow a phrase from Peter Pan, our "last night in the [very expensive] nursery." In the future, we'll explore opportunities off-property.
It's rather telling that every one of the items listed on Disney's own webpage dedicated to the "Benefits of Staying at A Disney World Hotel" has already been truncated (e.g., "transportation," with hours so abbreviated you'll be lucky to make it from your hotel to a park rope drop even if you take the earliest bus/gondola/boat/monorail), or discontinued (Fastpass, dining plan, EMH, free Magicbands), or will be gone by next year (DME).
https://disneyworld.disney.go.com/resort-hotels-benefits/