1. This allows internal transfers to avoid reinterviewing. I think many would agree that going through the same interview process is not productive, especially with the types of interview questions asked at FB (predominantly Leetcode style). This reflects FB's standard hiring process for engineers, where engineers are hired into a "general" pipeline and not to a specific team, with the implication that once they pass FB's interview, they are qualified to work on basically any team. The performance requirements are there so that engineers cannot just change teams every time they perform poorly.
2. I think the incentives are intended such that the very worst case for a manager is being forced to fire an employee for poor performance -- it means the manager was unable to help the employee improve their performance. Having them transfer within the company reflects much better on the manager. In practice, this may not be true in all situations.
In the general / common case, this system is great for engineers in terms of internal mobility.