Hi Nick,
It's an attempt to keep the better younger players in Wales.
The agreement reached between the WRU & Regions is an attempt to:
A) allow the Welsh Coach to have "access to and control over" Welsh players whenever they are required/selected for National duty.
B) help protect the Regions against the fat wallets of the French & English clubs.
C) encourage the players to recognise that (local clubs and) the Development Programmes of the Regions have helped them become better players.
The model is, I understand, similar to the one operated by Australia.
It would not be required if the WRU properly funded the Regions - as the Irish do with Munster, Leinster & Ulster, and the SRU with Glasgow.