The talent (as it exists now) returns the base mana cost of a healing spell to the paladin when the healing spell crits. (It costs 5 talent points to bring it to this level of effectiveness and requires 15 points in the talent tree. So a fully maxxed illumination will cost you 20 talent points in the holy tree.) The end result is that, overall, the paladin receives a mana discount on their healing spells equal to their spell crit rate. Prior to patch 1.9, a paladin could boost his or her holy spell crit rate by 5% through talents (priests have a similar talent that boosts holy spell crit), but it was difficult for paladins to get any other spell crit gear. The plate itemization simply didn't exist and there was heavy competition for generic items that a paladin could use like the Azuresong Mageblade.
Illumination as a talent that reduced the cost of all healing abilities by 5% for 10 talent points (5 points for illumination and 5 more points for holy power to boost holy spell crit rate) wasn't shabby, but it certainly wasn't overpowered. Even combined with the divine favor talent -- which gave a guaranteed healing crit on the next cast (1 talent point, requires 20 points in the holy tree) to give the paladin a cost free crit heal for every two minute cooldown -- the ability didn't seem overwhelming. After all, priests have a similar (but more flexible) ability called inner focus which is a free, guaranteed crit spell cast on a three minute cooldown (1 talent point, requires 10 talent points in the discipline tree).
But with patch 1.9 came the paladin's talent review -- and Blizzard seemed to embrace spell crit as a core element of the holy tree and paladin healing. Plate spell crit items started becoming more common. And with the 2.0 patch, an additional +6% healing crit (sanctified light, 3 talent points requiring 20 points in the holy tree) was added to the holy tree (giving paladins a total of +11% crit from talents). Now it became possible for a paladin to easily acquire a 30% or higher spell crit rate, making their healing spells cost, on average, 30% less than normal. And once you get spell crit that high, you start to really see a paladin's mana pool go further than anyone else's.
But does cutting illumination's effect by 40% fix this problem? (If you haven't yet noticed, a recent PTR patch changed illumination from 50% to 60%, max.) As Coriel notes, this simply devalues the many existing talents in the holy tree -- you're spending the same amount of talent points to get half the effect. And without spell crit, there's just no compelling focus to the tree as a whole.
And now that efficiency will not be the major advantage of paladin healing, I have to wonder what Blizzard expects to replace it with. From the news on the PTRs, it sounds as though it won't be replaced with anything.