There is a correct formation and continuation for writing letters.
Letter formation assists in children learning the next step of cursive writing.
Much research went into how people wrote and this led to the choice of "approved" letter formation and standard script for schools. When I was teaching there was some minor variation between states but I am unsure if this is still the case
Pen Licences are often used but not a formal part of handwriting. Some teachers do it and others don't.
Either way sometime around yr 3 or 4 depending on the state children begin to write with a pen and then go on to master cursive writing.
In my experience if children habitually hold pencils incorrectly or form letters in the wrong direction it is a little harder for them to master the "approved" script however this should not be a major concern and certainly not a reason to discourage them from forming letters.
Encouraging the correct direction and formation certainly helps but I wouldn't do it if it caused a child to lose interest in forming letters in the pre-school years.
Hope this helps