He can explain it in books all he wants, he removed it from his curriculum to please the Japanese who for whatever reason and likely multiple reasons didn’t want it.
Except that his students were taught the grappling and throwing portions.... You can say he removed it all you want, but his students clearly were taught it and in his writings, he clearly intended everyone to understand that part of the training.
He did remove parts when he was developing a physical education system for elementary schools... but then that was intended as exercise for elementary school kids... not as a martial art. When teaching Karate, the Martial Art, he clearly kept the grappling and throwing aspects. It was other folks, later on that removed and "lost" different parts of the art. However, there are still many who kept those parts as well.
I’m not sure how it’s fundamental to karate
Shu-Ha-Ri is a traditional way to transmit information and was used for lots of things, most recently Aikido. Its hallmark, it to teach the student Kata as step one. This is where Karate gets its notions of Kata. Karate uses the Shu-Ha-Ri method to transmit the knowledge and skill. Too many people, do not understand this, and think that Kata, by itself, is the method of transmission.... and that by doing Kata alone, someday the light will flash on. This leads to people memorizing a set of moves, and thinking that they have "mastered" a Kata. Nothing could be further from the truth.
Step one is the memorization and practice of the Kata, as an exact copy. This is to teach new skills, but more importantly, to teach the core ideas, and principles. Simply memorizing is not enough... you need to gain a deep understanding of what you are doing, why you are doing it and what effect it has.
Step two is to deviate from the Kata. This needs the involvement of the teacher. The idea here is that if the student truly understands the principles in the Kata that he learned, his deviations will express the same principles, through a different technique. Each student develops his own deviations. Further, what is a good deviation for one student, is not necessarily a good deviation for another. The idea is that first you learn the principles, and then you learn how to apply those principles in different ways.
Step three is to discard or abandon the Kata. You are free to express the principles in anyway that you wish. Further, the principles have become so ingrained in you, that you don't have to sit down and think about the moves and the principles... you can just respond, with the principles and the moves / techniques will be there.
The thing that makes Karate special is that it is not a set of x number of moves, the mastery of which will allow you to kick butt. Karate has x number of principles, the mastery of these principles will allow the Karateka to have an infinite number of moves and techniques to employ while kicking butt. These principles include all the techniques that the human body is capable of doing, and contains a framework, where these moves can be made effective quite quickly.
If your understanding of Karate is to memorize and copy these kata exactly, and then spar in some certain way... then yes, your Karate needs to change.
Memorizing a dictionary is not a great way to learn a language. When learning a language, you do memorize some words. But, then you learn to use those words in ways that teach you the principles and core fundamentals of the language. They idea is to provide a framework for you to be able to learn and use new words effectively, without much effort, because you understand how the language works. In fact, if done right, the focus is on communicating effectively, not on expansion of vocabulary. You are then free to use any words at all, in order to communicate. (your vocabulary will grow as a side effect)
Taking Shu-Ha-Ri out of Karate, whether you understand Shu-Ha-Ri or not, would reduce Karate into line dancing + sparring... its not Karate anymore.