It is a pity to see it have to be this way but even from when it was first announced back when consoles were part of the plan I couldn't quite see how it would all tie together. Between the OGBG (original base game) and Horizons there was a clear delineation between them, that isn't the case between Odyssey & HorizonsBG. Airless planets can be flown to in normal space and if Frontier wanted to keep all the Odyssey specific like settlements and concourses separate between HorizonsBG & Odyssey then they have to occupy a different instance. The only part where I can imagine common instancing working in theory between them is supercruise, and even then there may be reasons as to why that can't work.
Again, it is a shame to split the user base three ways, but rather than this being 'not the way to go' as some are saying, indicating that its somehow the way forward as a decision based on supporting all three, it's rather a bridge to cross; 3.8 is now a minimally supported legacy code base and 4.0 is the future with Odyssey being the main focus of any new developments.
The truth is that this is the way forward for Elite and the quicker every active and supporting player moves to 4.0 and then onto Odyssey, the sooner everyone can be united again. As a suggestion to Frontier, maybe there could be a time-limited exclusive, and worthwhile, asset in the game that can help smooth the transition.. <cough>Cobra Mk V</cough> or something like that...?