(At BADCamp, several people were asking me to explain what the heck the Web Services core initiative was trying to do, so I got to practice my elevator pitch. This is essentially that pitch in written form.)
Drupal today is very page-oriented. Every request that comes in is responded to with a full HTML page. It is possible to return something else, and finally in Drupal 7 there is, sort of, native support to do so with delivery callbacks, but by and large any non-page response is an after thought at best and a hack at worst. The entire system is built around the assumption that we're returning an HTML page. Why else would we still load the theme system and form system for an auto-complete callback?
In the past, that hasn't been a major issue. The web was a series of pages, in practice, and Drupal is one of if not the most flexible page-generating machine on the web today. Drupal 7 is, arguably, the pinnacle of this page-oriented world.
Just in time for that world to be fading fast.