does MS prevent them from releasing the game traditionally first and then bringing it to gamepass when the sales cool off?
Nothing stops 3rd party developers from releasing games traditionally first, but it's not really profitable if the developers aren't getting a big check to bring it to gamepass. Alot of small indie devs like the deal because Microsoft will pay them the cost of development so anything they make through micro transactions and other platforms is just profit.
Studios owned by microsoft don't have the option to opt out of day 1 gamepass releases. Currently the business model of gamepass isn't profitable but microsoft has enough money to take the loss, that's why companies like Sony can't afford to compete with them.
The problem is that microsoft isn't in the business of losing money perpetually so eventually they'll have to make changes at some point to turn a profit off gamepass. That might be a price increase for gamepass, slashing budgets for AAA single player games, or focusing on live service games that can be profitable from micro transactions.