A crippled but secure system like this, oriented towards guaranteed safe browsing and mail, might be useless for me, but perfect for my Luddite wife if she ever wants to communicate with future grandkids. It’s a marketing question as to whether there’s enough people like her to make this a worthwhile endeavor, though.
If Windows S turns out to be "guaranteed safe", it'll be a breakthrough for folks like your wife.
However, it's still Windows, and it's still just an operating system, not a panacea. Color me skeptical that "guaranteed safe" will really apply to WinS or any operating system. Microsoft's aim is not safety, per se. It's to drive people to the Windows Store. They see the Store as their future revenue stream, as their historical ones dry up.