Yes it's some physical connection being broken. It's not unusual to adjust the ways in which the electrical grid is connected. See https://www.youtube.com/watch?v=7Q-aVBv7PWM from Practical Engineering which talks about some of the nuances of building switches which can break connections between different parts of the grid safely.

Yes, they are already keeping the link at 0MW transferred for a while and will now disconnect it. You can read more on Elering's website: https://elering.ee/en/synchronization-continental-europe