They had to stretch the contract out. After losing Schmidt, we have to re-sign either Alzner or Shattenkirk right now. In addition, Carlson is a FA after this coming season, and Orlov will soon be due his money, as well as Kuznetsov on the offensive end.
I think Oshie is going to age well, so I do not think this will be a problem. While he is not a true elite talent, he does everything well and has a very balanced game. The Caps use him equally as much on the PP versus the PK, and he can fill in at all forward spots and has really meshed with Ovechkin and Backstrom. I think that was the biggest thing in deciding to bring him back.
Definite concerns about his durability. In all honesty, with 5 concussions, he really should not play another game. So the question is, can he still be effective while toning down his physical style of play, which he probably needs to do to have any chance at all of making it to the end of his contract. I love Oshie and everything he has done for this team but I fear for his long-term health, esp. post-hockey.