I have no problem with this note at all. I would do exactly as the teacher asked, open a dialog with my child about expected behavior in the classroom, probably with a bit about being a leader/good example as well. I don't need every gory detail or specific guidance from the teacher -- this teacher gave plenty of guidance. S/he wasn't asking the parents to provide discipline at home for something at school (which would require more detail), but was asking for some general support from home. This is something every parent should be ready to provide.
I certainly don't think that this is a teacher who's lost control of the classroom. As others have speculated, kids coming back from an extended weekend and heading towards the December holidays are going to be more difficult to control, and one kid can quickly set the others off before the teacher has a chance to intervene. Taking away free play (note, not recess, as I'm sure the teacher knows the difference) is the equivalent of putting the whole classroom on time out. Somewhat drastic but if you can't sort out the instigators from the followers, it makes some sense.
The fact that classroom expectations were probably discussed at the beginning of the term isn't really relevant. We're talking about 5yo kids and they need constant reinforcement. This is the short-attention-span-theater crowd. That reinforcement comes in the classroom but needs to come from home as well. You can discuss classroom behavior with middle schoolers at the beginning of the year and not have to do much to reinforce, but for little kids, it takes more work.