It may be a Paypal requirement in place now, BEFORE its required by IRS with passage of new pending legislation, in order so things do not come to a sudden halt as compliance is met by those sellers currently on paypal.
Besides, PP likely never passes up a chance to gather more personal info on its seller. I would disregard until they start to hold funds personally.
Optics wise, the $600 threshold has been in place for decades, the legislation could have been made more palatable if they had upped it to say $1000 or $1200, say for the reasons of "inflation", and slowly, as they often do, creep it back down over the next decade.

I also suspect this is a $600 annual threshold for PP seller, not a per sale threshold for buyer.

Reality check, that half the population is smarter then 50% of the people and it's a constantly contested fact.