Version 2 used to play back directly from the iTunes library but when you scroll back 3 years in this forum you will see that most support requests where related to problems with this integration. Due to the fact that you can do lots of song specific settings in Stage Traxx it needs to link into the iTunes library to the song. This link often changes. Most players that don't store song specific settings don't care about this because you just select a playlist from iTunes and the song links within this playlist are valid throughout the session. After years of answering the same questions again and again and urging users to properly tag their songs to prevent this problem I simply could not sustain this approach any longer.
Therefore I have decided to copy all tracks into the app. Space is not an issue as you can delete imported tracks from the iTunes library. And this approach also allows for single file backups which have not been possible in version 2. Overall the advantages are far greater than the disadvantages.