A browser 1% of the internet uses is a browser nobody can use. We already have extensive problems with mobile sites being tuned to only work against webkit - or even worse, only work against safari - if Firefox's share drops into the single percentage points because things like Netflix, Farmville and Youtube don't work, due to the exclusion of proprietary web features like plugins and H264, it will become so insigificant that web developers don't even consider it during development.
They haven't just lost this one battle though - they've set themselves up to lose a thousand further battles in the future. This puts Mozilla in a very bad strategic position; once DRM in the form of EME is relied on by a large chunk of the web, they have no way of resisting demands from content providers and their EME module provider to make it more invasive in an attempt to make it more robust. If sites like Youtube start relying on EME, something they will not do without widespread browser support initially, Mozilla will hardly be able to risk losing support for them.
They've taken the proposed 'uncompromised moral stand' before, with H264. And it was an utter failure: Google promised to support them, then quietly stabbed them behind the back and helped advance the cause of proprietary video on the web. Eventually it was impossible to do any good and they had to cave and support H264 - their users would have literally been better off to begin with had they merely implemented H264 in the first place, because some of them would have been able to remain on Firefox instead of having to switch to Chrome to use H264-only websites.
Once Google+Microsoft or Google+Apple or god forbid Google+Microsoft+Apple have decided to do something, there is literally nothing Mozilla can do to stop it. It's too late. If Mozilla manages to slowly build up a larger market share, at that point they may have leverage in those situations. Right now they don't, and pretending to have leverage only further erodes their marketshare.
