The overall goal is to entice developers into making smaller, more lightweight apps on the Azure platform, it seems. According to the official Windows Azure team blog entry, Microsoft is eliminating the "extra-small" designation entirely, and moving to a "small compute hours"-based metric.
These small compute hours can be converted into extra small hours at a rate of 3-to-1, which works out to that 20 percent price cut.
And it works the other way, too: If you've already purchased extra-small compute instances, or just need to ramp up your existing instances to larger resource pools, small compute hours are the new coin of the kingdom. The exact conversion rates are specified by the user's individual rate plan.
Here's Microsoft's own breakdown of the changes (and thanks to All About Microsoft's Mary Jo Foley for the screen capture):
Microsoft originally added the extra-small compute instance around the same time it began offering customers a free introductory path to its cloud. This pricing shift just seems to be an extension of overall efforts to attract smaller developers.