If they are laying a stone base I would persist that they remove the loamy soil; the top 5" or so. Any organic matter left behind, grass, is going to decay over time and compact.
What ever is on top is going to settle over time as a result. Things sag, get out of level, doors don't close properly, ect.
So to your response about the requirement of edging, I would say not unless you are placing the shed in a low point and using it to retain the stone to increase the height of the treated sleepers.
If you start with a level site and remove 4"-5" of soil the earth will retain the stone. Assuming your treated sleepers on the shed 4x4 or greater water shouldn't be an issue.
Seems to me like the railroad tie option is being offered for use as a means to compensate for low sites; elevating the shed by retaining the stone base above grade.
Personally I would choose to cut and backfill as required to create proper drainage around the shed and use the stone as a base for the foundation on properly compacted soil.