I don’t disagree with you when it comes to public-facing internet sites. On the other hand, about 80% of the web application market is in enterprise and intranet applications which have a “captive audience.”

Silverlight makes sense for shops that already use Windows on the server and desktop: they can reuse skills, experience and tools that they’re already familiar with. They might even be able to reuse some code.

Silverlight has 14% marketshare! Unless you want to force someone to download and install Silverlight, just to do what HTML does better, it’s a total waste.

However, as a demonstration of what is possible, this is nice, though it sould come with a warning.