That said, I think Microsoft made a serious blunder here; it's inherently flawed and I can't immediately think of a way for them to fix it without getting rid of its entire raison d'être.
Edit1: tho i can see the downsides of this, add you neighbor on Facebook and get free access to their WiFi xD
Edit2: You can select whether, you want to share network with Outlook, Skype and Facebook friends, so what i wrote in Edit1 could be invalid if you simply uncheck Facebook.
I don't use Windows, so I cannot use this system at all.
"add you neighbor on Facebook and get free access to their WiFi"
That's missing the much bigger downside. Give your neighbor your Wi-Fi password and they can share it with hundreds of their friends automatically.
Microsoft claims users will not be able to find the password and that users will only be able to access the Internet, but that assumes there are no security holes. I'm not comfortable putting my network security in the hands of a company I did not choose to associate with.
It could also require buying new hardware. Once again, I would know to look for a Wi-Fi Sense-proof router, but my friends would not.
I also don't think we should be expected to solve problems that Microsoft caused. Why should the industry adapt to Windows rather than the other way around?
You don't even need a "security hole": the machine needs to know the key to connect. From there, it's your machine -- you will be able to read it out of memory. Now, this is probably out of reach for most "average users", but for even a moderately capable attacker it provides little protection (and tools automating this will likely become available).
At best, if the Wifi network is using a passphrase it'll only send you the key (which is calculated by applying the PBKDF2-HMAC-SHA1 function to the passphrase using the SSID as a salt for 4,096 iterations), but this still lets the user get on the network and decrypt traffic.
Give your neighbor your Wi-Fi password, and they can trumpet it on the streets, distribute on pamplets, post it on HN, and update their Facebook status with it.
I am a little shocked at the HN reaction here. I've had a Windows Phone since January and I've thought the feature was not only useful, but a great idea. The only benefit for me has been the automatic TOS acceptance though since nobody else I know has a Windows Phone.
If you're running a "secure" wireless network and don't want anyone else to use it, well, don't give anybody you don't trust the password, and make sure they're not running services like Wi-Fi Sense. Generally speaking, the common man is going to want any of his friends he lets into his house onto his Wi-Fi anyway.
I don't believe Wi-Fi Sense is on at all by default (I am pretty sure I had to turn it on), and it explicitly shares only Wi-Fi networks you select, not all of them. You have to go in to your saved Wi-Fi networks and share each one individually. You also have to individually check each list of contacts (Outlook, Skype, Facebook, etc.)
It is absolutely not sharing all your networks automatically with all your Facebook friends.
Here are screenshots (note I'm 99% sure I turned on Wi-Fi Sense):
http://i.imgur.com/bzaK2aT.png http://i.imgur.com/vnbDkdj.png
I suppose it's ironic the FUD is directed against Microsoft now.