When Google introduced the world to Android 5.0 Lollipop in 2014, the new software contained some fairly sweeping changes over the previous version. Google completely overhauled the software's user interface, and they introduced several key features that still remain with the software to this day. One of those changes was the introduction of a new multitasking app view (a.k.a the "Overview" window), which replaced the vertically scrolling squares of the previous version with a Rolodex-style card stack. The new multitasking view looked strikingly similar to the way individual tabs were arranged in the Chrome mobile app, which had followed the same Rolodex-style presentation for years prior to Lollipop.
Google took things a step further by making individual Chrome tabs "a part" of the Overview menu. Instead of having a single app which contained all of your open Chrome tabs, you could access each of them individually from within the multitasking view, just as if you were accessing any regular app. At the time, Google celebrated the move by claiming it made navigation easier for users, allowing them to find individual web pages without having to dig into the Chrome app. This "Merge tabs and apps" feature became the default setting starting with Lollipop and continued into Marshmallow, but users did have the option to change it in settings if they preferred the old way.
It appears the Android team might be changing course on this decision, as new installs of the Chrome app do not turn the merge feature on by default. The option is still there in Chrome's settings if the user wants to re-merge tabs with apps, but they have to do it manually now. Again, this only happens with new installs of Chrome. You'll only see the change if you clear Chrome's app data and start over, or if you're setting up a brand new phone for the first time. The same is true if you install Chrome Beta or Dev from the Play Store, with the merge option remaining for both of those versions as well.
It's not entirely clear why Google is implementing the change. Perhaps they felt people just didn't like the feature and were manually turning it off anyway. Perhaps they're planning an upcoming feature that might conflict with merged tabs in the Overview menu. Whatever the reason, removing the feature's default status certainly suggests that they're moving in a different direction. If you're someone who likes merging tabs with apps, there's no need to worry because the feature is still there (for now) and won't disappear when you update to the latest version of Chrome.