That's a click-baity headline that doesn't really match the content of the article. Microsoft isn't going to be replacing desktop Windows installations with cloud installations, and nowhere in the article does it suggest it is. Many, many businesses require Windows installed on the desktop (and no, many of those can't switch to Linux, because the software they use is usually Windows-only). The article doesn't dig into who is currently using Windows 365 to stream the OS, but I would assume it's companies that are running computer kiosks, point-of-sale systems, or systems that would otherwise be extremely locked-down (like bank teller systems). Businesses that need system flexibility and resource-intensive applications aren't going to be using a cloud-based OS. Pretty-much any business that does engineering or creative work falls into that bucket.

My interpretation of the article is that they want to extend cloud-based Windows to other users that have extremely lightweight requirements. The biggest market I see is the education market, where you generally want to provide students with very locked down functionality. The article mentions competition with Chromebooks, which is also huge in the education space. I could see this as a competitor to an iPad/tablet too, for those who mostly do browsing, email, or lightweight web-based MS Office tasks and want to have a keyboard and mouse.

TL;DR: People are wildly misinterpreting this article, and there isn't going to be any kind of mass exodus to Linux because of Microsoft investing in Windows 365. Microsoft isn't going to stop selling installable copies of Windows.