Great! Now developers can stop bothering with Windows apps, and fully focus on Linux!
Or developers could now stop bothering to install Linux
This is Microsoft trying to Embrace, Extend, Extinguish Linux.
[This is] good for Linux enthusiasts not running Windows since the potential user base for Linux applications will become much larger.
What will probably happen is Windows will be able to run all Linux software, so there will be less incentive to switch to Linux. Programmers will be confused by thinking software they write in their Windows testing environment will run on all Linux distros, but there will inevitably be incompatibilities as Microsoft extends the capabilities of Linux software on Windows. Additionally, Windows native programs will run more efficiently, so developers will still not have an incentive to develop cross-platform for Linux.
Or inverse. Stop bothering with Linux because you can just move to Windows and have your basic Linux tools running in WSL.
Microsoft needs their Azure cloud platform to be a dominate competitor, so they are likely trying to embrace Linux to bolster Windows’ position as the main enterprise operating system. Virtually all cloud servers and cloud services run on Linux, so Windows is in a pretty precarious position going into the next decade as server-run webapps (SaaS) and mobile become increasingly dominant. If Linux software can run flawlessly on Windows this means Microsoft can push their way into the server market by eroding Linux’s position in a classic Embrace, Extend, Extinguish move.
Meanwhile, Google is working on their own next-generation operating system called Fuchsia to eventually replace Android, chrome, and Linux.
The next 10 years will probably be even more interesting than the last 10 for tech and Linux.