I doubt that Disney is too concerned with not-for-profit fan art or someone making a few items and giving them away to friends and family. When it turns into a commercial business where money is the prime motivator — as selling on Etsy is — a clear line has been crossed.
If Disney fails to stop those “mums in Queens” commercially encroaching on Disney’s intellectual property by selling 100 or so items, their legal standing will be compromised when trying to enforce their property rights against slightly larger businesses doing the same. At that point the courts will need to consider the question of why Disney let one business slide while prosecuting another.
As for getting real, as you put it, this is getting real. It’s the reality of a company needing to enforce its intellectual property rights or risk having the ownership of those right compromised.
I’m certain Disney has no wish to hurt single mothers just trying to make ends meet, and if they prosecuted them in court and forced them into bankruptcy, I’d be on these mothers’ sides. But simply asking them to stop and making their case to Etsy is showing restraint.
As @sprout said, the legal system treats these things proportionately. Someone working out of her craft room will not run into against the same level of legal threats as a full-fledged, mass production factory cranking out thousands of copies, but Disney still needs to do something in each case or it compromises its ownership and legal standing going forward.
Slightly off topic, but a few years ago, I created an infographic for a newspaper story where I used the term Channellock to describe a pair of plumbing pliers.
About a month later, I received a package containing a letter from the company that makes Channellock pliers explaining that they needed to protect their brand name from falling into common use to describe these types of pliers. They cited the same reasons that @PrintDriver mentioned.
To sweeten the pot, they included a pair of really nice Channellock Pliers that I still have and use. I’m certain the whole reason for this was a concerted effort on their part to build up a legal defense consisting of an ongoing effort on their part to defend their legally registered name. Some of the companies @PrintDriver mentioned never really did this sort of thing and, subsequently, lost certain legal controls over the generic use of their trademarks.