What does GFWL do to make PC games worse?
There's a video somewhere where it takes a guy 25 minutes to start playing Arkham because GFWL forces him to restart the game about 4 times and create an account.
It's all around a god-awful service that gives back nothing of value. Nobody uses it so the (bad) social functions are worthless.
Microsoft knows this and tries to pay all high profile PC releases to use it in order to get more people off of PC. Hell, they push "security" updates that do absolutely nothing functional timed with any major GFWL-tied release. Probably to force people that just bought Arkham City / whatever big-name GFWL title to go through update hell and remind them that Microsoft wants them buying console games instead. And the way their licensing agreement is, you can't actually bundle your game with the latest GFWL. It's designed so that anyone downloading the game off Steam is forced to go through a year's worth of updates. Valve has to honor the licensing, so they can only package the version of GFWL the game shipped with with any given release. You know, to make sure PC players have to spend 30 minutes updating the worthless piece of [censored].
Way back when GFWL was MS' serious attempt to turn PC gaming into a closed platform. It was to provide matchmaking, a central hub, yadda yadda ... for the low low cost of an XBL Gold membership. Thankfully PC gamers are smarter than that, so Halo 2 sold like five copies

. GFWL is more or less the same today other than not needing to pay for it. It doesn't have any new features from way back then. They push it as basically malware now using bribes and other pressure on devs to sell consoles by annoying PC owners. Everybody hates it and most hated it the instant it was announced well before Vista was even out.
Thankfully using GFWL is statistically proven to dramatically lower sales, so very few developers these days accept the bribes. It's hard to make up for missing half of your deserved sales because of GFWL. You know how Bethesda and the forum mods usually crack down hard on any mods that mess with the third party software attached to their games? I never once saw Beth or any forum mod here trying to stop the spread of the GFWL remover mod for Fallout 3. That ... probably tells you something. Today I think the script extender actually disables GFWL ...