This is brilliant.
Because Facebook is ideally positioned to build a gigantic web-based mail and messaging system. It is much better positioned, in fact, than Google, Yahoo, Microsoft, and any other competitor.
Facebook has become the center of the online world for hundreds of millions of people for a simple reason: It's a great way to communicate. Facebook users already keep in touch with friends via Facebook. They connect with friends via Facebook. They share via Facebook. If Facebook users can now use Facebook as their primary address book, email, chat, and VOIP platform, they will build even more of their lives around it.
Contrast Facebook's positioning with the core reasons people visit Yahoo, Google, and Microsoft, none of which have anything to do with communications. Yahoo is about aggregated content. Google is about search. Microsoft is about...well, we're not sure what Microsoft is about, but it's not focused on communications.
Those who don't use Facebook to communicate, moreover, don't use it because Facebook's current communication system can be really annoying. For example, it forces you to visit Facebook anytime you want to respond to anyone who has communicated with you (fine for core users, annoying for the rest of us). Building a full-fledged communications platform could bring a much wider group of Facebook users into the fold.
Will it be challenging for Facebook to succeed with an email product?
If Facebook produces a crappy email system, no one will use it.
If Facebook produces an excellent email system, however, it has a huge opportunity here.
Google has already demonstrated that it's possible to come from behind in web mail. Google's insistence on doing email differently, meanwhile, has left a gaping hole for a company to do it the way users actually want it. Yahoo Mail, meanwhile, has been deteriorating for years, and the company just doesn't seem eager to fix it. And Microsoft is still mostly concerned with protecting the paid Outlook monopoly.
So email is a great opportunity for Facebook — and a smart way for the company to spend its money.