The requirement means that all applications for iOS have to be built using the latest version Xcode 5. Apple claims that the changes in iOS 7 encompass three major changes which are deference, clarity, and depth. Apple suggests that developers review the iOS Human Interface Guidelines that were revamped just for iOS 7.
Apple would like to see a unified ecosystem and this is the reason for the push. Still some developers might not want to see the iOS 6 aesthetics depart, but long term it is likely best for the platform. With Apple making iOS optimization a requirement, developers have little choice, but to get on board with the change.