That rule was to keep people from offering 7 years to guys asking for 1 year to get an advantage. You can offer under what they are asking but not over.
Edit - adding from rules list:
2. Once players hit the open market, you may not offer a free agent a longer contract than what he is asking for. You can offer less years than what he is asking for, but not more. You may offer any dollar amount you wish though.
For example - If a player is requesting a 5 year contract, you MAY offer him anywhere between 1-5 years...for any dollar amount. You MAY NOT, however, offer him a six or seven year contract