This feels like the reset Apple did with iMovie a few years back:
http://forums.macrumors.com/showthread.php?t=640314
Apple made iMovie easier [1], and ultimately reduced the price of Final Cut Pro to $300, which is in the range of high-end amateurs or power users.
In this case, though, I don't think they care about the power user, because the threat/opportunity is down market in Google Docs. I think they are simplifying the product to reach a lot more people, rather than retain the loyalty of a small group of users who use Pages as a full-blown word processor. I.e., they want to convert a percentage of their iOS users to Pages.
Apple says they have sold 600 million iOS devices [2]. If you assume 300 of those devices are active, and Apple coverts 3% of those users, they have 9M new Pages users. If those iOS users happen to use the Mac version of Pages, even better. But they want to convert people away from Android/Google Docs as much as they want to shift people away from Windows/Microsoft Word.
[1] "Easier" is subjective, but as a long-time user of iMovie, _I_ found it easier, so I'll use that term here.
[2] http://www.theverge.com/2013/6/10/4415258/apple-announces-60...