I do not think you are really looking for a real explanation but if you really want to educate yourself; you can use Bing (or Google I guess looking at your post history and the "love" you have for Microsoft) and look at what Microsoft Azure / Amazon S3 or even Google Computing (in preview). Nothing to do with Gaikai or anything like that even if some forum experts claim it is the same.
Computing instances and VCPUs is all about what Microsoft is envisioning, nothing remotely close to what Gaikai or Online are... And YES, computing instances can obviously act as a dedicated servers so it will be mostly used by for that as it does not requires any special codes or synchronization patterns in the games... For every console out there Microsoft is giving the dev. (and the game) 3 vCPUs in the so called cloud (computing instance in their datacenter); and the dev can use those vCPUs to do anything (IA, pre-rendering of lightning for huge scene, pre-processing stuff, on-going calculation of the game world, etc... anything).
This thread will just be another bashing fest anyway, good job we did not have enough of these lately!
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