This feature seems entirely pointless, especially for this device (which should just be called the Pixel Fold 2).
Since the device is basically square (resolution 2,076 x 2,152) why would you not just rotate 90 degrees to change the side by side to top bottom like we can today?
There are cameras and physical buttons that you might want to use on the phone, and the fold might make it nicer to hold in one orientation. Also, the limitation exists because splitting the apps across the shorter side can make very awkward layouts, at least on small phone screens - no such problem with a square. I see no reason not to have the option of both layouts no matter its physical orientation.
I've never used a foldable though, so take my opinion with a grain of salt.