I think they say somewhere in their advertising that the battery inside the holder is a Li Ion 18650. I don't think they say if it is the 'protected' type or the 'unprotected' type.

I can guess a few reasons why they might put it in a custom holder...
- Make some profit
- Control the quality, capacity and type of cell
- Assure reliable electrical contact - better than you would get with spring contacts on a bare cell.
- Make it easier to swap batteries during a ride
- Reduce legal liability. Li Ion cells have been known to 'vent with flame' if charged improperly. The holder forces us to charge it only using their built-in charging circuit.