It allows you to play with friends but yeah, you're not able to actually make "friend exclusive" lobbies to match up your own friend team with another, or just have 8 friends at once.
It's a bit nonsensical that the game is full retail in the US but that Europe is getting it for lower. Under the European standard retail it makes a little more sense for it to launch with the content that's there but I imagine the American audience would preferably wait for a few weeks until the free content is done. I don't really believe that content was "withheld" from the full game or hidden anywhere since most of this seems like it was developed after the certification cycle (and a free DLC plan is a pretty good thing to have to generally "make up" for it) but it seems like they wanted this game done before E3 (like MK8) and I wouldn't blame people for putting off a $60 purchase for a couple of weeks.
It's nice that Nintendo are at least upfront about it. The game doesn't seem like it's going anywhere in terms of support and I feel like that was one of the key reasons why games like Hyrule Warriors enjoyed a good longevity. Hopefully same goes here.