They are pushing the decision from the L10+ level to the L7/L8 level. But we all know behind the scenes, L7/L8 will be pushed to behave a certain way. If it was truly their choice, those with a strict policy would bleed engineers to the directors with more lax policies, Amazon would not accidentally create a free market within their own company.
This is a deflection of blame, and nothing else.
If you hate commuting into the office and your current team is going to make you do so, you can transfer teams if there's not a hidden directive to just say no across the board.
If you dislike working from home, as I do, and your current team isn't going to encourage attendance 3+ days a week, you again have the chance to transfer.
Amazon keeps employees this way, and employees get their ideal balance. It seems better than the top-down one-size-fits-all approach if there aren't hidden instructions being passed down management chains. There's not as large a problem of a "preferred class" of workers if your director and everyone below them is on the same WFH/in-office balance.
I do agree about this being mostly a punting of the responsibility for deciding from L10 to L8. But I think competition is not a bug, it's a feature.
Also, amazon definitely makes free markets within the company. When I accepted the offer, multiple teams pitched on which team to join. Plus, OPs is different by team, as are opportunities to work on promotion worthy stuff (well, at least once you get to sde3)
Standard disclaimer: opinions are my own