it's because somebody somewhere is afraid to get sued
Which in this case is the CAA. Certainly no airshow display organisers that I know have been requesting these changes, and only a handful of display pilots seem to be in favour of the 'recommendations' of the AAIB-CAA cabal.
However in this case I think the Farnborough organisers are being reasonable; an exclusive uninhabited manouevring-zone is common at US airshows and does nothing to dampen display enthusiasm there. It might be more difficult to arrange in the UK, and may result in more shows moving to coastal locations, but I think we'd all be happier if organisers ( and their insurers ) had been permitted to self-regulate like that rather than have the CAA go into jackboot-mode.
Anyway, looks like the Isle of Man and Ireland now have a chance to become the display foci of western Europe...