What's Silverlight? It sounds like a simple question, and it ought to be easy to answer. Unfortunately, it isn't. My take? Silverlight is three separate products, trying to solve three different problems, targeted at three different audiences. First, Silverlight is Microsoft's competition to Flash. Second, Silverlight is a cross platformish desktop framework for .NET. Finally, Silverlight is the framework to build Windows Phone 7 applications.
The end result is a poor experience across all three problem spaces. Does Microsoft really think a single product with such poor focus is going to help them address their lagging positions in mobile and the web? They are competing against companies which are increasingly providing focused solutions. Look at what happened when, rather than build the right solution for the web, Microsoft tried to bridge the desktop-web gap.
What's worse is that Silverlight for the Web and Desktop is [for the most part] evil. Yet it makes sense on Windows Phone. And of all three markets, mobile is the most important to Microsoft (well, the web might be more important, but Silverlight isn't the solution to their specific challenges there).
I'd be pretty pissed off if I was the Windows Division. The stakes in mobile are high, they've had a ton of time to do it right, yet somehow, the development tools are surrounded by ambiguity and lack of focus. Its even hard to figure out how to search for information/docs/blogs/forums without being hit smack in the face with the ambiguity.