I filled out the survey on the Libby website re: automatic holds, but looking at the Overdrive FAQ it appears this was a feature not a bug so don't think it will be changing unless libraries request it do so.
Quote:
If my library acquires a title that a user tagged as Notify Me, is the user automatically placed on hold?
No. Users will receive a notification and can choose to place a hold or borrow the title (depending on its availability). This helps wait lists move more efficiently by not including holds for users who have acquired it elsewhere or are no longer interested in the title.
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from:
https://resources.overdrive.com/notify-me-faqs/ )I didn't see anything about why on the Libby FAQ, but it's possible I missed it there.)