My understanding is that it applies to all districts, regardless of the number of teams...and that it will occur after the next redistricting -- which occurs after next season. I suppose the main pro is that more teams have a chance to get hot and have an impact on the state tournament, but there will be more .500 (or sub .500) teams involved as well. Also, for baseball...the end of the playoffs coincides with the MLB draft, graduations, etc. -- the playoff calendar will be expanded.
I think there is already too much of an overlap between the sports -- football/basketball/baseball-track. This continues to force kids to choose between the overlapping activities.