My understanding of that passage is based on what I've heard in several shiurim. When the angels pleaded before Hashem, He said 2 things:

1. Be quiet
2. I'll return the world to chaos.

Each has a meaning. The first means this: "be quiet, if you think this is tragic and are upset about it, how do you think it makes Me feel?". I.e. don't think I don't care, I am unfeeling, or that your objection is something I even need to hear! I don't. I object to this too!

Then He answers the obvious question they would ask Him next: "if You object, why don't You stop it?". This is the meaning of 2). In order for me to change things, I'd have to restart the entire world from scratch, which I am not going to do.

Your question still stands though, as in why does it have to be that way, or why didn't He restart the world? We don't know the answers to these questions really. We struggle with them. At the end of the day, Hashem set up the world, and partnered with us in giving us free will and together we make a life for ourselves. He's not going to step in and override that, so the only option would be to just start over. He's not going to do that.

tl;dr: I don't think this is a decree/punishment thing per se. I.e. don't think this was an "evil decree". This was something that had to happen, was brought about for a specific reason, and the world can't do without it (without resetting the whole thing). That doesn't mean there isn't some element of punishment about it, nor that it was inevitable completely. See the following.

For a similar case of "starting the world over" see this passage about R Elazar Ben Padat in Taanit 25a, which has a more light hearted take on the matter:

רַבִּי אֶלְעָזָר בֶּן פְּדָת דְּחִיקָא לֵיהּ מִילְּתָא טוּבָא. עֲבַד מִלְּתָא וְלָא הֲוָה לֵיהּ מִידֵּי לְמִטְעַם, שְׁקַל בְּרָא דְתוּמָא וְשַׁדְיֵיהּ בְּפוּמֵּיהּ, חֲלַשׁ לִבֵּיהּ וְנִים. אֲזוּל רַבָּנַן לְשַׁיּוֹלֵי בֵּיהּ, חַזְיוּהּ דְּקָא בָכֵי וְחָיֵיךְ, וּנְפַק צוּצִיתָא דְנוּרָא מֵאַפּוּתֵיהּ.

§ The Gemara relates more stories of desperately poor righteous individuals. Rabbi Elazar ben Pedat was hard-pressed for money. Once an act of bloodletting was performed on him, but he did not have anything to taste afterward. He took a clove of garlic and put it in his mouth. His heart became weak and he fell asleep. The Sages came to inquire about his welfare. They saw him weeping and laughing, and a ray of light was shining from his forehead.

כִּי אִתְּעַר, אֲמַרוּ לֵיהּ: מַאי טַעְמָא קָבָכֵית וְחָיְיכַתְּ? אֲמַר לְהוּ: דַּהֲוָה יָתֵיב עִמִּי הַקָּדוֹשׁ בָּרוּךְ הוּא, וַאֲמַרִי לֵיהּ: עַד מָתַי אֶצְטַעַר בְּהַאי עָלְמָא? וַאֲמַר לִי: אֶלְעָזָר בְּנִי, נִיחָא לָךְ דְּאֵפְכֵיהּ לְעָלְמָא מֵרֵישָׁא, אֶפְשָׁר דְּמִתְיַלְּדַתְּ בְּשַׁעְתָּא דִמְזוֹנֵי.

When he awoke they said to him: What is the reason that you were laughing and crying? He said to them: The reason is that in my dream the Holy One, Blessed be He, was sitting with me, and I said to Him: Until when will I suffer such poverty in this world? And He said to me: Elazar, My son, is it more convenient for you that I return the world to its very beginning? Perhaps you will be born in an hour of sustenance and not be poor.

אֲמַרִי לְקַמֵּיהּ: כּוּלֵּי הַאי, וְאֶפְשָׁר? אֲמַרִי לֵיהּ: דַּחֲיַי טְפֵי אוֹ דְחָיֵינָא? אֲמַר לִי: דַּחֲיֵית. אֲמַרִי לְקַמֵּיהּ: אִם כֵּן, לָא בָּעֵינָא.

I said before Him: You suggest doing all this, to return the world to its beginning, and even then is it only a possibility that things will be different, not a certainty? I said to Him: Are the years that I have already lived more numerous, or are that I will live more numerous? He said to me: Those years that you have lived are greater. I said before Him: If so, I do not want You to recreate the world for the sake of a brief few years.

אֲמַר לִי: בְּהַאי אַגְרָא דַּאֲמַרְתְּ ״לָא בָּעֵינָא״ יָהֵיבְנָא לָךְ לְעָלְמָא דְּאָתֵי תְּלֵיסְרֵי נַהְרָווֹתָא דְמִשְׁחָא אֲפַרְסְמוֹן דָּכַיִין כִּפְרָת וְדִיגְלַת, דְּמִעַנְּגַתְּ בְּהוּ. אֲמַרִי לְקַמֵּיהּ: הַאי וְתוּ לָא? אֲמַר לִי: וּלְחַבְרָךְ מַאי יָהֵיבְנָא? אֲמַרִי לֵיהּ: וַאֲנָא מִגַּבְרָא דְּלֵית לֵיהּ בָּעֵינָא? מַחְיַין בְּאִסְקוּטְלָא אַפּוּתַאי, וַאֲמַר לִי: אֶלְעָזָר בְּרִי, גָּרוֹ בָּךְ גִּירַי.

He said to me: As a reward for saying: I do not want, I will give you in the World-to-Come thirteen rivers of pure balsam oil as large as the Euphrates and the Tigris for you to enjoy. I said before Him: This and no more? He said to me: But if I give you more, what will I give to your colleagues? I said to Him: And do I request this from a person, who does not have enough? You are omnipotent. He playfully snapped His finger [askutla] on my forehead and said to me: Elazar, my son, My arrows I cast upon you, My arrows. This touch caused the ray of light to shine from his forehead.

Perhaps pursuing the commentaries from here might yield some more pearls on this matter.