Makes a lot of sense.
Difficulty is simultaneously the easiest and hardest thing to do right.
Coding wise, it doesn't require a lot of work and is honestly pretty easy. Not to mention, most of the settings and parameters are already created beforehand for testing( even for testing things like level design and object placement, you might add no death or hover mode)
But it is difficult with regards to variance in people and their skills. For example, in gt7, I found the nurburgring CE to be pretty average in terms of difficulty, since it suited my driving style, the track played to my advantages, etc but for a lot of people it was extremely difficult( you can check via Google, the amount of people that were complaining about it) at the same time, I found the Laguna seca CE to be extremely difficult while others would rate it far below nurburgring CE in terms of difficulty.
A player may be good at one thing but terrible at others. A good difficulty set up envolves a lot of testing yet one size can never fit all. By adding difficulty options and especially ones that let you customise it, your settings can fit more people. As for "no death" more, it can be great for people who want a relaxed experience or are disabled. Nothing bad about it. It is an option, it is there, you don't have to click it. They will probably be using easy settings with "no death" parameter turned to true.