I don't think Microsoft is trying to kill off the desktop PC, but in general they're trying to make "PCs" of all types - Laptops, All-in-Ones, Tablet/Convertibles (like Surface) and desktops - more "plug and play" than ever before. Consoles are sort of the ultimate of that. Load the software, plug in the controllers and go with a minimum of fuss other than downloading updates.
PCs of all types have come a long way from the old days of fiddling with memory allocation to make games run, and fiddling with driver settings to get games to run/play sound, or get a joystick to work. But we still deal with installing the right drivers for the peripherals attached and components inside the computer. We still deal with software that has problems with some driver versions and not others, and software and drivers that break when Microsoft releases a Windows update.
Consoles sidestep that, and Microsoft is trying to bring changes to Windows that brings some of that simplicity to the PC platform. It's still a long way off, and frustrating as heck when it doesn't work or another update breaks something. But like some of the near-forgotten pain of "plug and pray" under Windows 95 & 98 that gave way to a much better situation under Windows XP, it will eventually get there. (Also, anybody remember how much resistance there was to XP when it first came out, and then later on you could barely pry folks away from XP?)
Desktops will be around for a long time yet to come, but for a lot of computer users, console-like systems are going to become more and more popular. They might steadily eat into sales of low- and middle-range gaming desktops. But for people who want to chase the cutting edge, higher-end desktops are probably going to be around for a good long time.
I think the question that Microsoft asked themselves is, how many flight sim users really want to tend to building and keeping a PC running for the sake of the sim software, vs how many just want to fire it up and fly? Working toward a console release keeps development on a path that will hopefully avoid pain points like dealing with FSX.CFG or using Nvidia Inspector to get around limited or clunky graphics settings. Or installing add-ons that require you to run and installer and multiple post-install steps before you can launch the sim. Or add-ons that need their multiple parts copied to various folders. The console isn't just a "lowest common denominator" of hardware capability. It's also a standard for ease of use when it comes to configuration and content setup. What if we didn't have to be deeply "computer savvy" just to set up and run MSFS?
