I think this is quite a detrimental change.
This is the most subjective of the points, but I actually liked the look of the butting machines. You don’t lose the “movement”, because it actually takes a lot of work to figure out configurations with more butting, so you always have some conveyor belt alongside the movement conveyed by the machines themselves. Having fewer conveyor belts can also make machines easier to follow, as an area with more butting appears almost becomes one composite machine, whereas having lots of single cell conveyors seems to add noise. Regarding how realistic it is, it’s neither realistic for machines to slot straight into each other, or for a square grid cell sized conveyor belt to link them. There isn’t any realism benefit either way as far as I can tell.
As Omnirach mentioned, the change at the moment has the side effect of preventing machines from being stored in certain configurations even when they are part of an active line.
The most significant problem with this change, however, is it’s effect on the gameplay. You might say “this makes the game harder”, which of course, it does on average as it is simply a restriction. However, you can also say “this makes the game easier to play closer to optimally” in the sense that previously “bad” configurations with excessive conveyor belt use are now much closer to the actual optimal configuration. This change effectively rewards sloppy configurations, while reducing the benefit of optimising configurations. If this is difficult to see, consider a case where it might be possible to make every machine in a configuration butt, with no gaps between the wall and the side of the configuration. This is likely very close to optimal, however, finding this configuration would also likely take a lot of thought and planning, or skill. Due to the fact that entrances and exits must always align in a specific direction, there will likely be very few such layouts, or it might even be unique. If we now consider an optimal configuration where a square of conveyor is enforced between each machine, the number of possible optimal configurations is now much more, because there are now more possibilities for alignment. On top of this, these now more numerous optimal configurations are relatively closer to your average, less-considered configuration,
Note, also, that the relative cost of having larger machines is reduced by enforcing the conveyor belt gap. On average, there will not be more conveyor belt required for any configuration, so on average, each machine requires more cells in the factory. This increase on the average space required affects the smaller machines more than it does the larger machines. Ultimately, everything is averaged out a little. There is relatively less cost to using larger machines, less benefit to finding optimal solutions, and less thought required to find an optimal solution.
It’s a fairly common game design goal to minimise complexity while maximising depth. This change adds complexity by imposing an extra rule on the system, while also reducing depth, in that there is both less potential and less reward for optimisation.