As far as I know it is not mandatory yet. Even you only comply on their level 1 kyc, that will do, you can play and withdraw your earnings without problem (based on my recent experience). But they might ask the users to comply for level 2 verification depending on the situation or if your account is suspicious.
I think it is the level 1 that is upfront which upsets people. Yes they do not ask much, but how would I know a place that asks the level 1 before even doing anything, won't ask me level 2 when I win something good? They might, and that is what bothers people. This is why I believe that we shouldn't really be expecting "everyone" to be ok with the laws here.
Yeah, it is not amazing but it is not terrible neither so we play, but some may not and I get that and it's fine. All in all, I just want to make sure that people are happy with what they have and I happy here and I play in other places too, I gamble in like 10 different places based now here I want, but I get people who may not want to.