Unfortunately, that's the way it's going to work going forward.
They've chosen a software kludge, App Slicing, to try to mitigate the questionable decision to limit their base iDevices to 16GB storage...in 2016.
Transfers to iTunes have been disabled because a slimmed version downloaded to a particular device wouldn't be "universal" and couldn't be re-distributed via iTunes to other devices a user may have.
On the flip side, apps downloaded via iTunes are the full "universal" versions, so transferring them to every device would negate any potential benefit App Slicing has, and is therefore discouraged, if not entirely disabled (yet). I don't think iTunes has been given the wherewithal to manage the many possible permutations, so they've decided to just shift the duty of app acquisition to the devices via the cloud.
Yet, because they couldn't entirely remove the app backup and purchase mechanisms from iTunes, it remains, albeit in a crippled and probably temporary form.
Considering that the majority of users never sync their devices to a iTunes or a computer, it's highly unlikely that addressing this would be a priority for them, even if they desired to keep such functionality intact for the users who do. At one time, Apple was a company that catered to its users. Now that they've attained a position of market power, they can freely dictate to users what they believe is best. The company that cared and looked out for the little guy is gone. They've become the company they mocked in 1984.