Am I missing a reason for such a change?

They wanted to fall in line with what all the Chromium-based browsers do.

That said, there is a way to get it to start asking you what to do with files again (though I don't remember how), but it still always saves the file to your Downloads folder (because that's what Chromium-based browsers do) which there is no option to change yet as far as I'm aware. To be honest, I'm not sure they ever will implement that as a feature, but I really hope they do because I hate having to go manually cleaning out my downloads when just letting me dump them to a temp dir would make life so much easier.

I think this "improvement" is pretty poor - If I'm interpreting your post correctly, I think you can set:

browser.download.improvements_to_download_panel false

in about:config