If I understand this correctly, any published app previously installed by the user from the App Store prior to it being published to the catalog will automatically be managed in the next release of the console WITHOUT requiring the user to download the same app again from the catalog.
Take Yammer as an example, the user may already have it installed from the App Store before we publish it to the catalog. Under the new console version, the user will automatically get prompted to accept management by AirWatch even when ' App Delivery Method' is set to ON DEMAND.
To avoid such prompt, the recommendation per AirWatch is to uncheck “Make MDM Managed if User Installed.”