I suggest to complain to Paypal about this BS. But I am afraid they will ask you to create an account as a reply ;-)

To speculate, maybe the email did create a placeholder account and they reserve this account, should you decide to create an account later. Or they need to reserve it for a grace period for the transaction to complete to the point when it no longer can be reversed. But it still is a screw up. At least in the interface. They should at least pop up a message that you cannot do this as a guest with that mail adress. Or give the option to stay a guest, but use the mail again.

It does not only connect to your bank account, but also to the recipient's. This means you can only send money to people you could send a regular money transfer. What this system does, is to ensure that the payment was done and verifies it to the shop. The reason being that the shop cannot access the shop's banking system in real time and check for incoming money.

This system will probably be completely obsolete in a year or two. Because what currently is not possible, will be possible in Europe. We shall see if that costs extra money or whatever, but the verification time benefit that systems like iDeal and even Paypal or Creditcard offer will just not be there, if you can check after 10 seconds, if the money was transferred. Almost like they show money transfers in the movies like since forever.

Credit cards and even Paypal offer other benefits. In this context mostly, that you can send money from Europe to the US for cheap. An international money transfer from bank to bank costs like 20 € minimum. Depends a bit on the bank. But you will not find a bank where you could send money to Itch's bank for a 5 $ game and be comfortable with the fee of the money transfer. And that is only from Europe to US. Who knows about all the other parts of the world.

Who knows, maybe they expand their service to be more usefull worldwide. Paying internationally with your bank account in different currencies and low fees would be handy. But I assume scammers would be also very happy about this. With credit cards you often can transfer the money back. With bank to bank this is usually not possible.