You can do what you wish with your property but not to hurt your neighors enjoyment of their property.
But that is exactly what the guy did. He built a fence because he can enjoy his property better that way (i.e., sell it for more money). Those folks do not own the lake, they have no right to a view of it, period. Several other plausible reasons for the fence have been given, but really aren't ncecessary. These folks had free enjoyment of the lake, now if they want to keep it, they have to pay. It's called the free market.
It's not extortion in any way. They can purchase the land or they cannot purchase the land. For sure, they have no right wahtsoever to land they do not own, nor a right to a view of land they do not own.