Actually, Harry suggested the half-in, half-out scenario to his father, who told him that would not be possible and that the Queen would never agree to it, so Harry then approached the Queen in person, who asked him to write up a formal proposal for her to review, after which they would discuss plans for potential scenarios and discuss their viability at that point. Rather than working with the Queen as she requested, the couple wrote up their half-in, half-out plan online and shared it with the world, without even notifying the Queen or anyone else in the royal family. It seems very likely they did so in an attempt to force the Queen's hand, but she stood firm, so it didn't work.
The Queen gave them a trial period because as one can't be half-in, half-out, the couple could only be out (since they wouldn't stay in), and she wanted to make sure that worked for them before severing all ties. She knew they hadn't wanted to be completely out (they made that very clear at the time & Harry still does), so she wanted to give them a buffer zone.
The Queen has bent over backward to accommodate the couple. Far too much so, imo.