Perhaps it should read "based on DECLARATION phase"? That would make sense. If you declared a total of 20% movement in one of your phases, you get -2 to initiative. Not sure why movement should be penalized such compared to other activity, though. And it seems weird to use it for "react and melee". I don't think we've ever used this at all.
We use "react and melee" quite a lot. It IS quite flexible (no target declaration needed, and equally important, no OB/DB split declaration needed until you attack or are attacked), and in my opinion the -10 is often a price worth paying. Note, however, that a "full melee" is +10, so the difference between the two is actually 20, which is far from unimportant. The "press and melee" is +0, and also quite useful, in my opinion. I think the "standard" situation is to use react and melee until one is engaged in melee, and then press and melee. Full melee is for when you're simply defending, and it's OK if your opponent disengages and moves away. Or if you REALLY need those +10, perhaps if you have to affect an opponent in snap. Or when your target is not expecting you, of course. Or if you don't have 80%+ left for melee (full melee is the only form allowable with as low as 60% activity; the other two require at least 80% activity, which, among other things, means that they cannot be used in the same round as you disengage, since that requires 25% activity)