PayPal gift payments are for friends to send gifts to each other. It is not to be used for commercial purposes. It is against PayPal rules to do so. One of the reasons a seller might insist on a gift payment is because if the transfer of money is from a PayPal balance to a PayPal balance the seller gets the full amount and pay no seller fees, and if the transfer involves a bank transfer or credit card funded payment the sender can opt to pay the transfer fees. That way the seller gets to pay no fees.
Another reason is because the seller is fraudulent and intends to rip you off since you will not have buyer protection on gift payments so can not get the money back trough PayPals buyer protection scheme.
But since it is a violation of PayPal policy you should definitely contact PayPal about this and hopefully the seller will have some problems with his/hers PayPal account because he violated PayPal policy.
I do not know if PayPal can help you get your money back tough.
If you used a Credit card to send the money one last option is to call the credit card issuer and do a charge back/Payment reversal.
