Apple is breaking iTunes functionality into 3 separate apps - Music, TV, and Podcasts, much like what they currently have on iPhones and iPads. This is helpful as they emphasize, for example, their streaming TV service. iTunes was a cutting edge product in its day. But Apple has not kept up with its development and has, in fact, made it a bloated mess, trying to serve too many uses. By providing these three different apps, Apple wants to look more like a multimedia service provider, making it more obvious they are into more than just hardware and music.
By removing iTunes, they are also changing focus from a user owned model to a streaming model where the user owns nothing. They have been moving to streaming model for a while, including with TV. From what I have read, their streaming services are on the rise and the iTunes store is faltering. Eliminating iTunes is a way to push people to their streaming services, which, over time, generates more revenue than selling tracks and albums.
Apple is expected to announce details tomorrow.