That email's legit. Blizz dropped support for the Dial-in Auth a while ago. Just get a mobile authenticator and set up SMS protect and you'll be 100 times more protected than the Dial In Auth ever could provice.
General rule of thumb is -- if the email is threatening ("We think you're trying to sell your account" or "If you don't click this link, we'll ban you forever!") then it's likely not Blizz contacting you. If it's informative, and not *asking* you to click anything, which this one is not, then it's likely real. You can always check the header in the emaill, as well, to see if it's coming from Blizz, too.
TL;DR -- It's real, calm down.
Keyfob authenticators are not getting "shut off." They will work and will work, and are still available for purchase on the Blizzard store.