It's kind of odd that it would be just one source tree. Surely it can't be one giant Visual Studio project.
However it's not weird to be one source tree
(There might be some things off-tree like some tools)
It's certainly debatable and there are advantages and disadvantages either way
Top level directories represent depots (think: repositories) of the SourceDepot version control system (home grown Perforce fork). Directory levels also tend to represent branches, so e.g. WINMAIN has branches for most depots (e.g. FBL_minio, FBL_minkernel, etc.) with additional subbranches following this pattern (e.g. FBL_minkernel_devices).
I liked Windows build system a lot. It's pretty neat how it works, what you can do with it, how you can build whole system or just parts of it, etc. It's not that simple to get build system of this size right, but I think MS actually nailed it.
[1] It has to be like that, otherwise it'd be impossible to support new platforms, like - say - ARM before WinRT was announced.
Between your comment about the dog-fooding of compiler drops, and the raving reviews of VS that I've heard (no first-hand experience, mind you), that surprises me. If nothing else, I would think that having everyone on VS while editing something like the Windows source code would surface VS bugs that one might not encounter in other situations.
That said, I do have a deep appreciation for the pushback against a corporate editor mandate.
Speaking of dogfooding - using unstable builds of VS (the IDE, not the compiler which tends to be pretty stable) for something else than developing VS itself sounds like a recipe for disaster when it comes to something as massive as OS. If you read some OSS mailing lists devoted to low level dev, you'll see that what low level developers actually want is LTS compiler, not some half baked C++ year 2135 early draft compliant turd. This is why e.g. OpenBSD sticks to some old GCC with custom patches.
This and GPLv3. ;)
Now that, I can totally see. IDE-based build systems drive me up a wall.