Other airlines can do similar. Assigned seats don't prevent an airline from bumping you; it's been a while, but I've had my seat changed without my involvement as well as had to figure out what to so when someone else had a boarding pass with the same seat as mine. I've had pleasant surprises too; booked towards the front of the cabin for a plane without an extra leg room section, but the plane that was used had extra leg room for that row, so bonus.
> I can’t imagine them getting any benefit out of having 737s with different seating capacities.
It's probably a mix of things; one being they bought many 737-700s before larger models were available, but it looks like they've got 192 737-MAX7s on order, so it seems that they'll have three sizes for a while and probably have two sizes once the 737-700s age out. Some routes probably don't provide enough customers to fill the larger planes, and using a smaller plane reduces operating costs. Two sizes isn't that many. Alaska operates more sizes and has fewer aircraft.