Whatever Toyota's reason for the live axle and not having a fold flat 2nd and 3rd row, it was very stupid. I had a 2008 Sequoia and it was a great vehicle in 2008. Toyota did not redesign the model in far too long and then made a really stupid mistake and step backwards in the redesign.
My guess is the reason for the high level of the folded 2nd and 3rd row is the live axle combined with the need of places for the hybrid batteries.
I have seen a Sequoia at an auto show and it was very disappointing, I have only seen 1 redesigned Sequoia on the road. My guess is that this design mistake will cut Sequoia sales in half of what they would have been (sales of the prior model were poor because they were so dated, so that is not a good comparison).