It must have been as Art stated, the outer race of the bearing has spun inside the tube that holds it. The mechanic is concerned that a new bearing, its outer “race”, not trace, will not press back in tight enough or its diameter is wallowed out of alignment to the center.

Most of the time they can you use a “Loctite” product called "Bearing Tight". They can center punch or knurl the inner diameter to make it smaller and use both methods together. We are only talking a few thousandths of an inch in most cases and the outer retainer “when shimmed correctly” helps “sandwich” the bearing too.

We are lucky that Volvo used actual unit bearings. Fords have used the axle as the inner bearing race for the balls. When they smoke, you may have to replace the complete axle too.

Considering the miles, an inspection inside the pumpkin and of the oil from the differential would be wise, even though the noise was the bearing. I think this bearing was on the driven side wheel. Depends on how long you drove it grinding.

The outer bearings are the weakest/cheapest link in the structure of the differential. They can suffer an early death if a brake caliper/parking brakes have ever dragged during its lifetime. This compromises the grease within them.

You could always find a lower mileage rear end unit. I am sure there are plenty to found and probably very reasonably priced. I would advise that on the next one, that you have their outer bearings serviced unless it is very low mileage with a decent warranty.

Phil