I listened to an interesting Steve Gibson podcast on this same subject and tend to agree with Steve that this is a decent implementation of a stronger single factor authentication mechanism, but it is far from multi-factor authentication.  This can certainly replace weak passwords with a slightly stronger authentication mechanism, but it most instances, real security will require a second, truly secret authentication factor.

http://www.darkreading.com/endpoint/microsoft-app-aims-to-delete-the-password/d/d-id/1328741