Are Amazon "Parental Controls" redundant if I disable "In-App Purchasing"?
In short, you are correct.  Disabling in-app purchasing completely via In App Purchasing option makes password-protecting under the Parental Controls settings redundant.

It's definitely confusing, and could have been better accomplished by having just one setting with 3 options: Disable, Allow, Allow with a Password.  It's possible that these two settings used to work differently on older versions of this app, and developers decided that keeping the settings separate would be less confusing to existing users than combining them.