Microsoft are just getting efficient. They have simply skipped "Embrace".
No they didn't. For one thing, Git has been supported in TFS for four years now. And then there's this:
"Among them, we learned the Git server has to be smart. It has to pack the Git files in an optimal fashion so that it doesn’t have to send more to the client than absolutely necessary – think of it as optimizing locality of reference. So we made lots of enhancements to the Team Services/TFS Git server. We also discovered that Git has lots of scenarios where it touches stuff it really doesn’t need to. This never really mattered before because it was all local and used for modestly sized repos so it was fast – but when touching it means downloading it from the server or scanning 6,000,000 files, uh oh. So we’ve been investing heavily in is performance optimizations to Git. Many of them also benefit “normal” repos to some degree but they are critical for mega repos. We’ve been submitting many of these improvements to the Git OSS project and have enjoyed a good working relationship with them."