Some users (US users, or those willing to pay $8/mo for Twitter) are generating multiple times the average revenue per user. People in poorer countries are generating less than the average revenue per user.
On Facebook, for instance, US users bring in 5x the worldwide average revenue per user.
That is why it's only a reduction in ads. This deal reduces their revenue per user if they went ad free for those users.
I don't think so. Twitter's ARPU from advertising in Q2 2022 was around $4.50. ARPU from advertising in the US was more than $14.
Users likely to subscribe at $8/month (power users in western countries) are more valuable than average for advertising.
No ads for $8/month would probably be a very bad idea.