It's unusual for an application to (effectively) change its name or primary status just to circumvent Store logistics, but it's not the first time. Anyway, according to VLC's developer:
"Unfortunately, we couldn't release it on our main distribution channel because of an odd Windows Store issue (version number problem). As the amount of users asking for an update is tremendous, I decided to use our Private Beta channel and transform it to a Public Beta channel."
Thanks to the videoLAN web site, there's a full changelog for this v1.6.2 and the last time we featured VLC here, though it includes a lot of VLC for desktop stuff, so it's not very readable for phone users.
With regard to Windows 10 Mobile:
it should work with Windows 10 Mobile but phones get hot easily
Which doesn't inspire confidence, and I can bear out that VLC for WP Beta is highly unstable under the new OS but then it (W10M) is in its early days. A few screenshots of it working on Windows Phone 8.1 though:
You can grab VLC for WP Beta here in the Store. See what you think - it's still very much a work in progress!
PS. Note that it's also a universal application and you also can follow its progress on any Windows 8.1 or 10 tablet or laptop.