Games

So, Diablo has two "realms" in which characters can be in, the seasonal realm being one of these. As the name suggests, the seasonal realm is where seasonal characters play through seasons, which are periods of time in which players attempt to complete multiple levels of increasingly difficult challenges. Playing the seasons can earn a player rewards, both free and paid, through the battle pass, which unlocks these rewards based partly on seasonal progress. Seasonal characters are created new at the beginning of the season, and transfer to the other realm, eternal, at season end, where they persist.

Being that there are paid rewards, I can understand and support Blizzard's reaction. Allowing players to exploit a paid service, even in a way that seemingly doesn't effect others, sets a poor precident. Beyond that, I'm not sure if there are ways in which it effects me, but I've not participated in much PVP, which I think would be the most obvious advantage, as otherwise we're not competing.

I don't have 4, but if it's like 3 then there are regular characters who can die and are persistent, then there are seasonal characters who can die but may only be created at the beginning of, and are deleted at the end of, a given season.

Then there's hardcore, who are persistent forever but can only die one time. All three have their own ecosystems in which characters created in a given mode can share gold, certain upgrades, and items with each other, but not outside of their own mode. You can have multiple hardcore characters share items and gold, but you can't give those to regular or seasonal characters, and so on.

Rollbacks with live service games generally don't go over well with the players, especially the ones who did nothing wrong in the first place.

The problem with doing a rollback is that, unless you want to spend a lot of time fixing the things the rollback breaks, you have to roll EVERYTHING on the server back. This means all players will have progress reset and items lost. More players are likely to quit the game than Blizzard will lose by banning a few cheaters.

It sounds like you needed to log one character into the wrong server and disconnect/reconnect the internet at the right time, so it seems pretty unlikely anybody banned actually did this unintentionally.
There isn't really much need to rollback every innocent player if the exploited stuff is relatively traceable.

Unfortunately I was very young when D3 came out and I never played Immortals. So I had to learn from D4 ¯_(ツ)_/¯