In a FAQ for Windows Phone developers Microsoft revealed all XAPs downloaded from Marketplace will now be delivered encrypted. Associated with this change is dropping support for Windows Phone 7.0 handsets, which will now no longer be able to download Marketplace apps.
XAP Encryption has been supported since Windows Phone Mango, but actually flipping the switch had to await the number of NoDo and earlier Windows Phones to drop to only a few percent of users.
Piracy is a problem that rampant on both iOS and Android, with rates as high as 60-80% for specific applications. The issue certainly exists on Windows Phone also, making measures such as this long overdue.
See the FAQ at Microsoft here.