I'd imagine a party divided is still a better enemy than a party united.
But I'm not inclined to think they are playing 4D chess, there just doesn't seem to be great political capital to be gained from almost winning.
Labor are the only party other than the Liberals that could possibly win Warrandtye. Surely a Liberal win further unites the party room behind Pesutto or keeps things the same.
As I said, my analysis is there is nothing much to lose for Labor from running in Warrandyte, and possibly plenty to gain. Doesn't matter now, the chances of Pesutto lasting as leader have increased with Labor not running.