Essentially, the atmosphere contracted due to the solar minimum and they want to make sure inoperative satellites decay within months rather than years. Ballistic decay is a safety mechanism in case their satellites break down. Also they will use less fuel for avoiding the crowded 550km band.
> "As solar mininum approaches, atmospheric density decreases, which means the ballistic decay time at any given altitude increases — lowering will mean a >80% reduction in ballistic decay time in solar minimum, or 4+ years reduced to a few months," Nicolls wrote in his X post. "Correspondingly, the number of debris objects and planned satellite constellations is significantly lower below 500 km, reducing the aggregate likelihood of collision."
Lower orbits > Increased atmospheric drag > More fuel expended to maintain orbit > Heavier sats due to more fuel > Increased launch cost per unit
Or even: Lower orbits > Increased atmospheric drag > Quicker orbit decay > Shorter lifespan of sats > More frequent launches
Forgive my Kerbal-based space knowledge here.