From what I read about it all, it's a positive move for Microsoft to make it easier for games devs to use their 'Azure' computer resources to act as scalable servers that are importantly, cheap enough, to allow far more games publishers to include dedicated servers for online gaming.
This emphasis on 'money' begs the question though... are games publishers like Activision, Ubisoft and EA skint? Look at how much money they've made from their respective blockbuster titles/franchises and ask yourself why they never paid for more dedicated games servers in the first place? To me, it's because online gaming on 2nd gen consoles was more of an after-thought, something you could do not something that the system was going to be properly good at without the proper dedicated server support.
But - I think it's all very positive as the guy says, dedicated server rental isn't exactly cheap but that also makes me wonder why MS/Sony etc didn't give people the option to hire servers themselves as with PC gaming then the cost to publishers wouldn't be part of the equation?
Also - on a technical side: I think Nelster's knowledge of how online gaming works, even on dedicated servers, is much better than our own understanding. There's more to it all as other forum readers have mentioned, like server side/client side collision detection systems and also plenty of latency jibbery-pokery going on to even out latency differences between players all connecting to one server.
Well. Not sure you're gonna read this anyway. Might as well whistle in the wind.