Not sure what you are unclear about...BBS is a 1A (playoffs) sized school, which, because of the multiplier, has been moved up to 2A (playoffs). IF the rule was not in place, BBS would likely be moved up to 3A, still with a 1A enrollment, and probably would be the smallest school in 3A.
To keep the playing field level, as you say, there needs to be a balance on both sides. The 1.8 multiplier pushes up from one end, and the 1 classification rule pushes down from the other. If fairness is given to the teams in 1A by the multiplier, some measure of fairness also has to be given to the team being multiplied.
I understand where coach is coming from...if forced into 3A, BBS could compete, but would be at a disadvantage. Moving to DII would have at least kept BBS competing on a more level field.
If all BBS is doing is looking for an advantage, they should have moved to DII class A already...I think the path to a state championship might, on the surface, look easier there than where they are now.
Now, if you want to talk about a team that underestimates their numbers to play down in classification their first couple of years...