PayPal's rules, like eBay's, are clearly spelled out when you sign up. If you don't like the rules for any reason, you don't have to use either one. However, they are probably the same rules we would institute if we owned the business.
Holds on payment funds are generally used by PayPal when you don't have a track record as a seller, and/or if you don't have a credit card on file. It is to protect the buyer in case the seller is trying a scam or defraud.
https://www.paypal.com/us/smarthelp/search?q=hold