And yes, as JamesonNetworks suggested, the cynical side of me thinks Apple execs knew that this would negatively impact a subset of users' batteries and were at least OK with that (despite environmental/shortened-product-lifecycle implications)

1) It's part of parental controls. You can disable in the parental controls the ability to turn off "loud noise reduction", it's possible that since setting to the off mode also disables this, that the toggle exists so that the off mode can be removed from the mode list as well with this restriction in place. I can't validate this because that parental control does not appear to be something you can enforce on your own device when you're the "parent"

2) The medical certifications for the hearing aid functionality require that the device can not be accidentally placed in a state where using the device as "intended" can cause further hearing damage. By placing the mode which disables hearing protection functionality under a separate explicit toggle with notes about what that does, it satisfies the requirement while still allowing the use of the mode.

At this point, Apple clearly has a bunch hearing loss experts working there, and they’ve introduced features like Reduce Loud Sounds, the hearing test, and hearing aid mode. Apple can show that they are doing everything possible to prevent their products from causing hearing damage and even taken steps to help users who already suffer from hearing loss. Burying the option to disable Reduce Loud Sounds helps Apple’s case, because it makes it harder for users who suffer from hearing damage to argue that they disabled it accidentally, and perhaps Apple even has evidence that this measure reduces harm to users.

So, there’s a tradeoff between the feeling of frustration some users will have at Apple’s apparent paternalism, and the permanent harm that users are being protected from (and Apple’s liability).

I'd challenge the idea that off/passive really is the "normal" mode, from the ordinary user's POV or Apple's POV. The headphones just don't sound good in this configuration, with neither the background nor the audio sounding clear. They aren't engineered to give good sound isolation OR good background pass-through without active support, and until this post, I didn't even realize that the active modes use more battery life.

The messaging to users is also unclear. Without understanding how ANC works, what does "off" actually mean? It's not turning off the audio playback, and it's not turning off the background noise. It IS however turning off the (newly-advertised) active features like Loud Sound Reduction, which users would expect to be working whenever they are wearing the headphones (or at minimum, whenever music is playing).

In typical Apple style, it makes perfect sense for "off" to be treated as an advanced feature; the problem is that they already shipped it a long time ago, and then removed it without any explanation.