Windows 10S is probably much more than Windows RT. First, if the user is unhappy with Windows 10S, it can update to full Windows 10 Pro, for free (as of now) or for a mere USD 49 later on.
The point of Windows 10S is perhaps to make Windows less bloated and more streamlined. The new Surface Laptop has a 14.5 hour battery life and consumes no battery with its lids closed. And it is also reportedly very fast and snappy. This is all probably because of Windows 10S, which seems to me the kind of Microsoft's attempt to replicate an iOS experience in the sense that it is fast, simple and less resource consuming.
If Windows 10S works, then the Microsoft App Store will be full of apps in the future. It is good for Microsoft because it will receive a slice of the developer's pie, as Apple does. And it will likely be good for the user, as Windows 10S will become a viable option which is faster and less resource consuming (including battery) than the full Windows 10.
If Windows 10S does not work, then the user can upgrade it for only USD 49, so it is not the end of the world. And if it is a failure, Microsoft can acknowledge that and make the upgrade for free in the future.
So, there is no real downside in trying this strategy. Windows 10S can fail and it is OK if it does. I think it is very clever from a business perspective. Much better than Windows RT which was not upgradeable at all.