Moderators exist to moderate a community, not to shut it down wholesale. Reddit's response is the only reasonable one they could have made. If the majority of your userbase likes sub X and some mods (fewer than 10 for such a sub) want to shut it down, then of course Reddit would open it back up.
People here on HN and Reddit decrying this as the end of Reddit likely don't remember all of the controversies of Reddit over the past 17 years since it's been active. Hell, most of the current userbase came in after the most recent blackout in 2015 due to Ellen Pao firing Victoria. This has all happened before, with no effect to Reddit, indeed, much the opposite, seeing their user growth numbers.