According to Microsoft:
The Learning Content Development System (LCDS) is a tool that enables you to create high quality, interactive, online courses. Virtually anyone can publish e-learning courses by completing the easy-to-use LCDS forms that seamlessly generate highly customized content, interactivities, quizzes, games, and assessments—as well as Silverlight-based animations, demos, and other multimedia. Register to download the free LCDS release, then start creating your own e-learning courses today!
I found that Jan Van Belle downloaded and installed the LCDS last night. He offers a few reactions here.
From what I can surmise, it seems like this is an offline tool. Instructors (or e-Learning developers) need to publish the material somewhere. I also cannot tell if a gradebook tool is included.
Given that this product is for Windows-only, a downloadable application, and instructors must go through a publish step, I don't think this version of the product will take hold in higher ed or even make more waves than a brief mention like this.
Let me know if you've tried out this new tool and what you think about it.