Desmond no longer a series regular? 

I'm guessing most likely he agreed to terms of being removed from the main cast (bigger pay check) to a supporting character role, which has no effect on his characters storyline since HIC said he was "still considered a regular on the show and will definitely be appearing in Season 6"

While I am saddened that Des will no longer be a regular character, it does make sense that his role will be reduced due to the outcome of the lawsuit.

Yeah, usually when you agree to a settlement your guilty. There were apparently a few more terms that remain confidential but one can assume this was part of it, while I love Desmond, what HIC did was wrong and he does deserve some form of punishment.

^^ Totally agree.

And if I`m honest I`m not all that bothered about Des not being a regular character. He`s still going to be in Season 6 and thats what matters, right?

I`d be more sad if he wasn`t gonna be in it at all.