The company first discussed the software last September as one of a series of perks intended to improve the value of Software Assurance, which had been criticized by some customers. Fundamentals for Legacy PCs was originally targeted for release last month.
As with all thin clients, very little is run locally, including security tools and document viewers. Production software is all run on remote servers, and supposedly will give a session that very much resembles Windows XP. There are other perks that come with this, and likely this is another way that Microsoft is using to ease people into distributed computing.