Not What It Was Intended For
The flat UI worked well in places where the navigation paradigm was consistent, like a Windows Phone or a Zune (or to a lesser extent on Windows proper). You didn't need to know what a button should look like in Windows Phone because the navigation buttons were in pre-defined spots. It worked well even in unfamiliar applications because placement was consistent enough that you *knew* to click on the title, or look in a submenu.
This is not "Microsofts Fault". It's the fault of unimaginative copy cats getting it wrong. As one of 12 people world wide that bought a Windows Phone, I can tell you that the UI paradigm was leaps and bounds over everything else and nobody has caught up. Unfortunately, Microsoft turned around and watered it down in an attempt to find acceptance and dismantled some of the best features.