Okay, I'll take a shot at it.
The "excuse plot", in the beginning of League of Legends, to explain why these random people are fighting each other is basically this: There's this magic world called Runeterra that's pretty much at constant war, but the factions and people involved in the battles of Runeterra were so powerful that they were seriously damaging the world in irreparable ways. In order to bring some semblance of peace to the world, the Institute of War was founded - a nigh-omnipotent group that enforced a ruling: All military conflicts will be settled on the Fields of Justice, through proxies. The nations would select Summoners, those Summoners would select Champions, and a mini-scale version of the war would be fought, with all parties involved respecting the results of the battle, whatever the outcome was.
In the early years of League, the Institute of War - the league itself - was the centerpiece. Every champion's tale was focused on "why are they here?". This one's the prince of one of the major nations, here's one of its knights, here's said knight's sister (Jarvan, Garen, Lux, btw). The ongoing story aspect was focused around this world and the plays at power that Demacia and Noxus made, etc etc.
In the last two years, that hasn't been the case at all. Lore has refocused itself to be far more about the world that League is set in, not centralized on the Institute itself. More and more, the institute was faded into the background - often getting no mention at all in champion bios and discussions. Yet the stories were still being set up - Lissandra desiring to freeze the world anew, Nami's quest, the story of Leona and Diana, the vengeant tale of Thresh and Lucian - none of these really hooked much on the Institute. They could, but the institute by and large was being pushed aside.
What's happened today is the announcement that the Institute of War - the original excuse plot element that explained "why are these people fighting in these random groups" - is cut out. Entirely retconned.
The degree to which this impacts the story is both severe and not. There are some things that are having to be massively overhauled (Skarner's story, for instance, is entirely rooted in the actions of the Institute to stop a war from breaking out by literally freezing time) - although by and large not nearly as much has to change as some would have you believe (The large majority of characters aren't going to have to change much to accomodate this, the factions haven't randomly resorted themselves, or anything). League of Legends, as the game, is now essentially a "What If", a noncanonical playaround in the Runeterra universe. That's the big direct takeaway.
The justification, to paraphrase Riot, is that the Institute - while great in the beginning - is a root they established early on that they view as preventing them from letting Runeterra as a setting and universe stand on its own two legs now. It's been clear over the years that what the Lore department at Riot wants to do is to focus on the world that Runeterra is, not just the "why are these people beating on each other". To put it the way another poster did, they don't want Runeterra to be full of LoL characters - they want LoL to be full of Runeterra characters.
In a way, it makes sense. There's a lot you can do with the Institute, but also a lot the Institute's existance prevents from happening. So long as everything theoretically has to tie back to this 5v5 miniwar, so long as it's expected to tie back to that, it's an inhibition to actual storytelling. And it seems like they've got a lot of story they want to tell.
The question is, at least to me (and I think to many others really), is that if they're going to make such a drastic move are they actually going to capitalize on it. There's a lot of potential opened up - but whether they will actually do something with it that makes all that's had to be undone worthwhile is the question. Not many lore fans believe they will, based on years of getting almost nothing.