This makes perfect sense to me. Say I was breeding Examplehounds (;)) and had a kennel full. I have my eye on three promising male pups out of my new litter, but keeping them all around on the potential that they will turn out to be spectacular isn’t the best option–any of the three may turn out to be the best, but by the time you decide #1 is a little too light of bone and #2’s bite is slightly off after his skull finishes developing, they’re a year or more old and won’t make such good pets as if they’d been placed as puppies.
Meanwhile, she wants to keep his genetics in her breeding program for specific reasons, and doesn’t want you to go studding the dog around to anything that’ll stand still for a little extra spending cash, or for a competing kennel to cash in on her hard work by offering you a substantial stud fee.
Also, what JR Brown said re: Harlequin danes and the associated disqualified colors.