I see that Goodereader has taken this to the next level and is claiming
"Amazon is discontinuing the Kindle Cloud Reader" with no actual evidence beyond what others have posted.
I think the opposite. Amazon making changes to how it works indicates to me that they have development resources working on it. My guess is that the offline mode is problematic and not much used so may have been dropped to reduce support calls. (And unlike Goodereader I will say that this is just my speculation.)