I guess people are finally becoming aware that their coins stored on an exchange are never safe as long as you hold them on an exchange.
Maybe, I'm not so sure about it. Likely too many don't have a clue what "Not your keys, not your coins!" means. On the other hand, you have to keep in mind that people need to keep their computers and smartphones safe and clean to store and use their own wallets safely, unless they use hardware wallets properly. I have some doubts regarding the ability of safe computing of the "average Joe/Jane" even when they are in crypto.
I think Coinbase rolled out this announcement at a wrong time since the market is currently in a down trend.
People are in a panic already and this statement by Coinbase would have made people kind of paranoid.
I have no words how poorly Coinbase communicated it, especially in present heated times.
The best thing for people to do is hold the coins on a non-custodial wallet but before doing that make sure you have enough knowledge about wallets and private keys.
It has advantages and disadvantages to hold your funds in self-custody. You're in charge to have enough knowledge and ability to store your wallet(s) and keys safely. Sure, it's not rocket science. There's an obvious disadvantage when you have your funds in your own wallet(s): if market movement requires a timely reaction, e.g. to sell some amount of your coins you'll likely face mempool congestion and high fees required if many users have the same urge as you do. Probably it's good to keep some healthy balance how much you have in self-custody and how much you leave on the exchange. I have the majority in my own self-custody wallets and only a minor part on an exchange.