Like Nintendo's currency of the same name, Microsoft's "Points" have been confusing people since they were first released, humans being accustomed to think of money spent in terms of, well, money spent. Not some abstract points scheme.
If it makes you feel any better, Microsoft never meant for MS Points to confuse you. To mislead you. "We never intended to ever mislead people", Microsoft's Aaron Greenberg told G4. "I think we want to be transparent about it, and so it is something that we're looking at. How can we be more transparent and let people see it in actual dollars?"
He goes on to explain "no matter if you're on the yen or the euro or the dollar — something that's 200 points is 200 points everywhere around the world", which apparently makes things easier on Microsoft. Except... the points themselves don't cost the same from region to region, undermining that uniformity.
On the bright side, when it comes to Microsoft's Games on Demand pricing - which uses real currency - Greenberg says the "response has been good and absolutely it's something we're looking at doing [elsewhere] ".