I chose not to go that route because I wanted more power and storage. But it was definitely under consideration.
I'm a developer and the last thing I want when i'm relaxing on the couch, on a trip, etc. is a laptop that gets hot, has a tiny screen, and has a horrible form factor for consuming the tubes. The Fire is a credible alternative for most of that with the possible exception of casual gaming (which i love to do).
I think "laptop replacement" isn't talking about me and you, it's talking about my mom who spends all her time on facebook or email and casual games and doesn't do a whole lot of other things.
I can use google docs on my iPad, I can type emails, I can consume. That's about all 80% of home computer users need generally, so that's why it's a laptop replacement. Not sure you'll have a lot of luck making a presentation on a Fire or updating a spreadsheet, but those things are doable on an ipad even if they are a little cumbersome. (80% obviously made up!)