I actually think this is a better solution for the users.
In this way, you first have a catalogue app with all the games. But it’s not like you are playing 100 different games at the same time. Maybe a handful. They are then added to your Home Screen as any other app on your iPhone.
I mean, it’s not like you go into the App Store to launch the apps and games you’ve already installed, right? No, it’s a lot more convenient to launch it directly from the Home Screen.
So, for what it’s worth, I don’t think Microsoft can argue this is a worse experience for the user in the long run. It is however worse for Microsoft as they have to manage hundreds of apps. I’m sure they could find a lot automation around it and each app would literally just be different meta data with a unique name, icon and a string from which game to launch. But still.