Users will be able to manually revoke that permission on Android 14 (already available in the current beta under Apps -> Special app access -> Full screen notifications);
Google Play will auto-revoke those permissions from newly installed apps unless they provide call or alarm functionality;
This permission will remain for apps that were installed before the Android 14 update.
Some apps already display ads as notifications I think? Won't be crazy to imagine that there might be apps who'd do that using this fullscreen intent to show you a fullscreen ad even when your phone is locked, as if you had received a call. But again I'm probably outdated on this and just speculating, haven't had a single app displaying ads since a very long time.
They are used to push through the lockscreen e.g. when you get a call or when a timer finishes. I assume camera apps might also use it for the button shortcut (double-tapping the power button opens your camera in most Android phones). If the app doesn't do calls or alarms of some type, I can't really think of any valid reason why they would need that permission unless it's something weird like Tasker and you want it to.
Other permissions that are also "revoked by default" like this are using the accessibility services or drawing over the screen - you just need to have a popup in your app that says "the app needs \ to work, please enable it in the following screen" and then opens the settings page.