What this means is that you are restricted to developing native code in C++ or managed code in VB/C#. Mixed mode managed native is also supported. The API, WinPRT is referred to as "a significant subset" of the Windows 8 SDK.
It appears that you can create Silverlight and XNA apps using SDK but these will only run on Windows Phone 7.1. In other words, these project types cannot target WP8.
This seems to confirm the suspicions that, with WP8, Silverlight and XNA are no longer supported for future and on-going projects. This means that WP7.1 Silverlight/XNA apps are legacy apps Microsoft wants the way of the future to be WinRT, whether it is on the desktop or the mobile.
The best you can do is to use the upgrade option, but you cannot upgrade XNA based apps just WP7 Silverlight apps. For XNA apps all you can do is to continue to work on them as WP7.1 apps. Some of the XNA framework is available for use in your brand new WP8 app, however.
There are also some additions: a text API to make input easier, a speech API, a camera API, Bluetooth and In-app purchasing..
The SDK comes with a version of Visual Studio Express for Windows Phone 2012. It only installs on a 64-bit version of Windows 8 and only on real hardware - virtualization is not supported. The reason is probably that the WP8 emulator makes use of hyperV undeer Windows 8 and needs access to the virtualization hardware.
All of this is going to be a big shake up for any existing WP7 developer - it really is a restart. Microsoft is telling you to convert your code to the new way of doing things.
As far as developers are concerned, WP8 is a new platform.
The claimed advantage of this restart is that code can be shared between Windows 8 Metro apps and WP8 apps. Given the large number of omissions and extensions that separate WinRT and WinPRT this isn't going to be much of a consolation prize.