That's kind of cool, actually, but also kind of scary. Seriously, in 10 years are we going to be walking into tiny stores that have no real inventory except for empty boxes, paper, and blank DVDs? It's just such a weird thought.
Maybe not just in stores, but also maybe see some of these kiosks in say grocery stores like Redbox has.
EDIT:
I think what'll be awesome about this thing is if say the game is riddled w/ no DRM and no CD-keys, this thing can probably spit out as many copies of a game as necessary. If a game does have DRM and CD-keys, I guess they'll just have to get the developers and publishers to just generate more codes.
Also, retailers won't have to worry about stocking inventory and letting it sit there to depreciate in value if nobody decides to buy a fair amount that they decided to stock of X game. Hell, it's up to you the customer to decide what gets printed and where.
Also, if Microsoft has these kind of stores all over the place - why the hell would they need to deal w/ retailers? They can just cut the middle-man - like Best Buy and GameStop - right out, if necessary.