Short answer would be Collection Power.
Only factor in modern cards, so you can't game it with super cheap Chaos League cards and voila, you can't go into D/C with a level 1 account but you still get to play a card that's not maxed (yet).
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I think they don't want to use CP again as a metric since I recall it used a lot of computational power to have the system calculate the CP of players constantly or something along these lines. But they can limit it to just Archons - Only max level Archons can be used in Diamond/Champ or something. Max level Archons are still a considerable investment so I doubt many (if any) people would buy/rent max level Archons and then fill the team with level 1 cards. Might as well get decent cards while they are at it.
I am also against a "max cards only in Champ" requirement. Despite maintaining a max level modern core deck, some promo cards I didn't level up intentionally because cost/benefit didn't justify it, and some I still can't justify (or there aren't enough on market to buy at a reasonable price or at all if I wanted to). Strategically not leveling up a few cards is also a thing, but that is rare I think. Reward cards are obviously another fault with this requirement since it takes time to level them.
Applying the level requirements to archons/summoners only is a great compromise. That keeps Champion as an "elite" division - most players there will have mostly max cards, so putting the limit on the archon/summoner only would keep most unleveled decks out of the division, but still allow for not having everything at max level. I think few people would level up the archons/summoners just to play in Champ, without also leveling up most of their cards (because they'd get wrecked otherwise!). There'd be little point in having a sub-league of schemers trying to cheat the system because the earnings would be tiny compared to the cost of maxed archons/summoners. The R share formula could also be modified to take card level into account to drastically further reduce any SPS/Glint rewards a player could earning doing that.
Diamond would be your division if you're working on leveling up your archons/summoners (and other cards) to reach Champ, and it justifies having both divisions.