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For our purposes, consider the two levels of users: Data Artisan and Member
A Data Artisan is a user who creates analytic applications using the Alteryx Designer Desktop and then shares them publicly and/or privately in the Analytics Gallery.
A Member is a user who can run applications that are shared privately through Collections. A Membership is granted by a Data Artisan. A Member also shares the privileges of a Viewer to run all applications published in the Public Gallery.
Since a Data Artisan creates analytic applications using the Alteryx Designer Desktop, they need an Alteryx Designer Desktop license. Generally (not always) a user with a Designer license has a Data Artisan role on your Gallery. When you revoke access to that license, they can no longer use Designer to create and publish.
Members, on the other hand, simple consume applications created and published by others. They do not need a license, they only need access to collections or the application in the Public Gallery.
When you revoke the license, Alteryx is doing you a favor by asking "since you are revoking this person's license they can no longer fulfill the requirements of a data artisan, so would you like to make them a member instead?".