So I suppose I'm still confused with how this new allocation is going to help to occupy so many more rooms ? Because I'm looking at polls that are saying a huge chunk of people are decreasing their stays or the amount of days they stay. Some are saying will go every other year or even every 3rd year....some are dropping 1-3+ days every year. So how is this helping occupancy rates ? I honestly don't get it. The only thing I can come up with, is perhaps DVC is hoping to push people into seasons with low occupancies. IOW, some Members will shy away from the Magic and Dream season points and get gently pushed into Adventure and Choice ? If not this, I don't know. As I said, this allocation certainly is NOT going to push any measurable amount of the Sun-Thurs crowd into weekend stays. I could see requests for smaller units going up across the board ?
First I'll say that this really IS a difficult thing to explain--unless someone smarter than me can come up with a more simplistic manner.

But I'll give it a shot.
The statement I bolded above in your quote is the most significant one of all. The entire purpose of the
point chart is to balance supply with demand. DVC isn't doing this out of some selfish need--they are doing it for the benefit of the membership.
The entire idea behind DVC is that the resorts be at 100% occupancy
every single day of the year. (Some points are withheld for maintenance, but I'm going to ignore that fact for the purposes of this discussion.)
Really take a moment to think about that 100% occupancy. If you eliminate banking and borrowing, that means the ONLY WAY for every owner to use his/her points is for a resort to be full every night of the year. Every room---every night! All 800+ rooms at SSR would have to be filled 365 days / year. All 400+ rooms at the BoardWalk, and so on.
So whenever there is a room that does NOT contain a guest, it means someone is not using their points. If a single SSR Grand Villa sits empty on a Fri/Sat in Magic season, that is 234 unused DVC points for that single room (under the old/current charts.) If there are 10 empty Savanna View 2Bs on a weekend during Dream season, that's 1400 unused points!
...and so on.
Now there are some reasons why rooms could sit empty. The banking/borrowing rules mean that some of the points may have been banked into the next Use year. But ideally you want those numbers to be close to balancing out. When the total number of points banked and borrowed is similar, again there should be ZERO VACANCIES.
If there is an imbalance in favor of banked points, we have a problem. Let's say that in 2006 there were 2 million points borrowed and 4 million banked. No good. That means 2007 has more points than it can reasonably accommodate. And if the same disparity occurs in 2007, 2008 and so on, we're really headed for trouble.
DVC doesn't disclose any data so it's hard to put real numbers to that. But I'm just circling around to the point that
every room should be filled
every night of the year.
Another way that rooms could sit empty is if people allow points to expire unused. I'm sure that does happen--but it should cause us to question the "why." Did the points go unused out of apathy? (Some do.) Or was it because the member wasn't able to find a reservation which fit their travel needs? If so, that's another red flag.
People can also trade their points out to
DCL, RCI, etc. In those cases rooms are handed-over to CRO. I'm sure that some of the vacancies are CRO rooms. But the rooms available for points bookings should be COMPLETELY booked. No 25% member cash discount. No rooms given to CRO 60 days out under the breakage rules. Zero vacancies. Zilch!
So how do we get to 100% occupancy? We try to balance supply with demand. And that's what the point reallocation does.
Under the old (current) charts, about 60% of the week's points were spread over Sun - Thurs. The other 40% of a weekly point cost was in Fri & Sat. If that is commensurate to demand, members should collectively be using 60% of their points for weekdays and 40% for weekends.
With more and more people buying into DVC as a "bargain vacation", I suspect the scales tilted to the point where something like 75-80% of points were earmarked for weekdays while the weekends were severely under-booked. That sets up a situation where people cannot get the room they want, short notice bookings are impossible, points go unused, members are dissatisfied, etc.
The idea is to find equilibrium. Instead of 60% supply and 80% demand for the weekdays, perhaps things will balance out better at 70% for both supply AND demand. And in DVC terms, the means for increasing supply is to raise the points each night.
Supply and demand...it's all supply and demand. And we members determine the demand...NOT DVC.
Maybe this is even more simplistic: Let's say you own enough points to visit 5 nights per year. The
point charts changed and now you can only afford 4 nights per year. That's one night freed-up for someone else who wants to spend points on a weekday. Multiply that one night by the thousands of members similarly effected and what you're doing is creating the capacity to absorb the points that other members have previously been unable to use.
At the same time weekend costs are slashed. Those who visit on the weekends can stretch their points a little further and it will encourage other folks to start visiting on the weekends when they previously would not have done so.
DVC's goal should always be to balance supply with demand to get as close as possible to the 100% year-round occupancy.