Are there registrants in the third-level today? It doesn't appear so. The application filled in every single blank with "no problem lol" making it appear that zero customers or registrants will be affected, like at all. So, was anyone taking advantage of this service? They will immediately be terminating the service and so, if anyone was renting space thusly, will have a very narrow window to transition service. But yes, registering "N.N.name" without directly registering "N.name" seemed like a bonkers way to run things.
There are 22,000 third-level registrants currently. https://www.icann.org/en/system/files/files/reconsideration-...
(via https://www.icann.org/resources/pages/reconsideration-26-2-s...)