I'm probably in the minority here, but I disagree with the decision, and in fact I think BBC4 should've gone too. I think the BBC should've focused on providing fewer, higher quality programming on the two channels (BBC1 and BBC2) it has had for half a century or so. Less is more.
I do see the potential in viewing new talent on BBC3, but I agree with an earlier post about getting the youth demographic to watch linear TV again seeming to be a backwards step.
Again, I don't think they're trying to get the youth to watch linear TV. They're just trying to capture the audience that is still there. They're not that bothered whether they watch the programmes live or on iPlayer, so long as they watch them. See it as more of an extra shop window for iPlayer.
Remember the cost of running the channel itself is relatively small compared to making the programmes, which will be made anyway. They're obviously banking on it being a worthwhile cost, if it helps to drive more viewers to the programmes, and they can say a year down the line "look, we've increased our reach of 16-24 year olds by x%"