The goal of this is to end the flood of small packages from China, which our postal service has been subsidizing thanks to a stupid, ancient UPU postal agreement that should have been terminated long ago.
In practice, shops selling cheap Chinese goods are forced to set up warehouses in the EU area, where they then bring shiploads of goods to be sold as intra-EU shipments. Shipping costs are then actually reflected in the price because the seller has to pay the actual freight costs from China to Europe and then include them in the price.
This levels the playing field between Chinese shops and companies operating within the EU now that shipping is no longer subsidized.