The entire purpose of no-ip is so a server can keep the same domain easily while their IP changes (Dynamic DNS). I'm guessing that these servers were either rapidly changing IP addresses or being brought online/offline quickly and Microsoft wanted to locate them by hijacking no-ip so those servers told Microsoft directly when they were changing IP address.

Just a guess.

Probably, but in this case, somehow Microsoft discovered they were using the noip.com's Dynamic DNS service... perhaps the Control servers "floated" around on the net and Dynamic DNS discovery was the best option?

That would tie you to a single IP address (or range) that could easily be blocked or taken down.