"AAA game" is the common gaming nomenclature for the big studio releases. IE: Battlefield series, Final Fantasy, etc. Basically, anything by a big studio that's going to be a massive release, and that $60 (USD) minimum price tag at launch.
Consoles that have tried this sort of thing in the past haven't offered those type of games. (looking at you, Ouya) They've mostly been streaming boxes for Android games and apps, not your big console and PC releases. While that sort of thing does appeal to some people, it's the AAA games that really sell a platform. Sure, indie games are great, sometimes I like them better than the big studio games, but you're not selling consoles if all you're offering are indie games, especially since many of those wind up ported to everything else anyway, or are easily available for PC on Steam and GOG.
One thing that's nice about Microsoft doing this console based on the existing One S platform is that the One S already takes hard drives easily. I have a Seagate 1TB USB drive that I bought at Walmart (ironically, to transfer my stuff to when I upgraded my PS4 HD) and all I had to do was hook it up to one of the One S's USB ports, format it, and it was ready to install games to. So, at least there's that. You can download your games locally with the One S.
Seriously though, that's good information to know. I know there have been some people on youtube who think that disc less console and Google Stadia will mean games studios will stop producing console specific games in order to get a wider audience. However, I think they under-estimate the part time gamer market. It is entirely possible to have and appeal to different demographics within the gamer marker. Not every gamer wants the same thing.
