Gmail is one of Google's most powerful weapons in the realm of social, which the company is putting an increased emphasis on now. It is in Google's best interest for as many people to like Gmail as possible. I suspect Gmail will play an increasingly central role across Google's whole universe as it adds social layers to more of its products, and places more emphasis on Google accounts/profiles. 

This is a seemingly minor change that could have significant ramifications. 

To adjust the setting, simply go to settings, find "Conversation view" and turn it on/off. Google will be rolling out the feature over the next several days.