I don't know how I feel about the specific execution, but the fundamental idea of it should really have been in the DMG. Even better would be a guideline for letting GMs pick their own conditions for XP game tailored to the theme and goals of their game. These are a decent default for the "typical" D&D game, but given they acknowledge your game might not hew exactly to the three pillars they push, it would be nice of them to also explicitly acknowledge the possibility of tweaking these.
Incidentally, the combat section still entirely ignores the possibility of bypassing combat encounters without necessarily defeating them, such as by stealth or trickery.
I do like it better than the methods of milestone advancement or even "level up when the GM says so" that I often see expounded, even by the developers themselves.