Well, it does say "to access all features". This is probably a reference to their swap/exchange features they have. Blockchain can't enforce KYC on people (unlike exchanges) because they do give you a seedphrase so you can always move to another wallet (or so I think based on the last time I checked). But yes, it's not a wallet I would recommend using. There are way better alternatives out there.
It's definitely one of the worst Bitcoin wallets because in 2015-2016, when I was experimenting with Bitcoin wallets and I didn't know much about it, my first wallet was created on Blockchain info. One of them was working okay but another one had some problems. I couldn't login into that wallet anymore, I was receiving verification email, then I was clicking on it, verification approved but blockchain.info had some technical error only on that wallet and I couldn't login, doesn't matter how many times I tried. My another wallet still works fine today but I use Electrum for almost a decade already.
Btw this is definitely a preference to their swap feature. I've been receiving such emails since the day they implemented it. Sadly, I know many who uploaded their KYC documents to get $25 for free from blockchain. It was probably in 2018 if I remember correctly.