Holds are common where you are given services or goods, but have not yet paid in full. You see them at the gas pump, hotels, rental companies, and others, but they can be handled different ways. Some you may know about, others are done and cleared without you knowing.
I have had hotels put a hold on some amount less than the bill (maybe a nights stay or a couple hundred), and have had rental cars process payment for the estimated amount as a hold, adjusting and finalizing on return. To a degree, the hold does verify the card works and will assure any payment is within the credit limit.
I have not had a large hold placed on a car rental, but it is a common practice, especially where insurance is waived. It serves as a damage deposit.