I think it's because players have to download an old version of WoW in order to play. This is a full game download and includes artwork and music IP content. Not to mention it means there is no need to pay a monthly fee to Blizzard.
Blizzard is fully in their right to shut it down, but it's unfortunate the current state of things.
This is not about getting around paying for WoW. Vanilla WoW is practically abandoned-ware. Blizzard has been clear they have no plans to launch a Vanilla server, and they don't even seem sympathetic to the idea. There is content and gameplay in Vanilla that you cannot experience in the current version of WoW. There are many old school players who have fond memories of Vanilla (including me), and we have no way to get our nostalgia fix other than a server like Nostalrius.
I have moved on from WoW and have no interest in the current game, but I would enjoy experiencing Vanilla again, just like I enjoy playing old SNES RPGs, listening to 80's music, or reading the same books or watching the same movies over and over. With other forms of media you can do that, but not here. I understand the legal reasons, but still, it's unfortunate.
I see this as another new and lamentable consequence of things moving to the cloud. I find similarities here with the Nest/Google fiasco. It used to be you could buy something and it was yours, completely, forever, to do with whatever you want. Now, not as much.