Color me naieve here.....

Some signed some kind of agreement with amazon, has tens of thousands of items in their warehouses, and is running a business where amazon is basically responsible for everything.

Amazon decides to drop them.

The reasoning sounds unfair, but this business is unable or unwilling to pay for lawyers, and didn't consider what would happen in the event the relationship ended and there was still stock in the warehouse?

That sounds like a failure on the part of the seller to me.