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I think the notice refers to coinbase (where your counterparty is coinbase) not gdax

Seems like selling qualifies as a transfer, no? I think you can still receive and send LTC to other wallets, you can't convert to USD.

Not if it's internal to coinbase -- can all be marked against an internal ledger, right?

Buying and selling does not access a backend wallet. Only when it is transferred outside of the exchange do you need to actually touch the blockchain.

Selling doesn't do an on-chain transaction though. It's only on-chain when you withdraw (or deposit).

Coinbase is an exchange, you're exchanging with other Coinbase users. Wallets only come into play if you're moving crypto in or out of Coinbase. That's a good thing, wallet transfers can be slow and would really make trading a pain.

I heard somewhere that they keep some of each digital currency on hand to help with price stabilization between when you buy and when transfer is done.

So like, you buy not from someone selling, but from Coinbase's stash, who then buys to refill from someone else.

No idea how accurate that is though, maybe someone can back me up or correct me here