@Terry: Those are the same questions I've run into whenever someone's said, "Office went cloud, so Windows will too." That Windows will be intimately tied to the cloud via services (e.g. OneDrive, Skype, etc.) is beyond serious dispute. But conceding that point isn't the same thing as expecting Windows 365. As you say, how would such a service be implemented? Via thin clients as we currently think of them? But if Microsoft's goals for the product are more mainstream, how that work? While the idea has appeal at a high level, it's hard to sort out the bits and pieces, unless Microsoft ends up introducing it as a very niche service that might grow over time.
The rumors are all over the place. Some describe it as an enterprise-oriented virtual desktop service, some describe it as a mainstream option in which something like Windows 7 Starter comes on the device, and people add extra bits - for a price - through the cloud. Some of these reports also mention subscriptions.
While I can imagine use cases for some of this, I see enormous potential for consumers to feel nickel-and-dimed if Microsoft tries to make this flavor of Windows the mainstream option. Yeah, you can draw comparisons between this device and something like an Android tablet or iPad, in which the OS is factored into the initial device price, can be augmented with cloud features, and isn't ever really a cost concern again as long as the device remains technically up-to-snuff. But those platforms walked into new markets, without legacy customers to drag along. Not so for Windows. I think the importance of this distinction has already manifested in many ways, such as users' refusal to ditch Windows XP. It's obvious that Microsoft wants to deploy Windows updates the way it deploys Azure and Office updates, in a continual stream of improvements, rather than discrete chunks. But do subscriptions follow? Does it make sense to locate part of the OS in the cloud, and part of it on the device, as WZor seems to suggest? I guess we'll see.
What I know is this: The job postings are legitimate, and do not seem to describe an existing Windows service or product. Microsoft also modified the wording of the most recent job posting as soon as the media started catching wind of it. Could be benign stuff that just happens to look suspicious because it overlaps with rumors. But it also looks like Microsoft is planning something.