After reading what you wrote and later reading the topic Official Single-Sign-On for Discourse I think I understand the idea of IDENTITY = EMAIL now.
When it comes to things like migrations from a mailing list and Sign-On from another source the email address is the only way to identify which users from the different sources are the same user.
The password reset function also makes since.
The problem for me is that for some email users like email is not a unique to my user account.
I have a different email address for Meta Discourse, How-To Geek Forums, MythTV mailing list, Google, Facebook and most others that all ends going to the same email mailbox.
I do this to keep track of where email is coming from in the case of spam.
One site I receive a Daily Newsletter from used an email provider that got hacked twice.
I now have mail sent to those email aliases discarded.
That site now uses a different email provider that so far has not been hacked.
A white ago before I started doing different email addresses, I gave a regular email address to LIfeHacker.
When Lifehacker’s parent company got hacked the regular email address was leaked and still gets spam today that I think is due to that hack but I don’t know for sure.
Unfortunately, I’ve found many websites in the last few years have switched from username/email logins to email only logins which means I have to remember which email I used for a certain site and use it to login.
Besides being a bit of a pain, a full email is longer than a username is contains a character that can’t be typed with one hand (the at sign).
I suppose in short, I can say while I don’t think using an email address as an identity is a good idea, it appears that in certain situations Discourse has no other way to identify a user.