It's more tangled up than that. Electron is a GitHub project, GitHub is owned by Microsoft, and you can already run Blazor on Electron. The Blazor Desktop is about giving Blazor a lighter-weight container, so that a "desktop skinned" Blazor application isn't as resource-intensive as it would be with Blazor-in-Electron. So it's not a better JavaScript-in-Electron competitor unless you already prefer the Blazor framework.

The markup for Blazor doesn't use XAML; it's more of a component-extended HTML, sort of like React. The XAML you're probably thinking of is in the separate desktop branch of MS development: UWP, WPF, and Xamarin (now MAUI). This "two paths to the desktop" is wayyy confusing, and I've tried to clear it up in The Future of Windows Apps, Demystified. Basically, the XAML is in project types that are about native applications, whether that's on desktop or mobile.

For me, the bigger problem is the way Blazor can't directly access the HTML DOM without going through a layer of interop. Maybe it's not such a big deal, but I find it awkward.