In NSA, and U-trip, they're allowed to advance before the third strike because a foul ball that is not caught in that scenario would not result in an out. The reasoning I can see behind declaring the ball dead when the foul ball would result in an out regardless of a catch is to move the game along and not waste time. It's quicker for the ball to be caught and runners not move than it is to let the ball fall to the ground, waste time walking after it, and then getting the ball back in to the same result as not allowing the runners to advance on the catch.
This rule isn't dumb, but it is different than that of traditional baseball and softball which makes people think it is dumb. Really, this is no dumber than the hit-and-sit rule, or the IBB without a pitch. Now, what's dumb is having the players not know this rule to allow the "foul ball, let it drop" stuff continue and waste time when in the field.