For my money, this is a very smart move.
Moving down the stack
One of the questions for the future mobile landscape is whether players like Facebook and Amazon can move "further down the stack" - that is, to start being more core to devices, or making their own. Amazon have tried with their Kindle Fire phone, and Facebook had Home - both bombed out, however, and there hasn't been much to suggest that there is more promise for them.
However, Hello seems to me like it could be a small step to bridging that gap. The app is simple in itself, and done well I could see it being very popular - after installing, it doesn't need any active engagement from the user, but (hopefully - without having tried it myself) just sits there and enhances the users phone experience (as long as they don't try and do anything stupid, crazy annoying notifications, battery hogging etc) - As a simple enhancement to the incoming call screen, I can imagine pretty high retention/install rate - because why would you go back to unknown numbers?
One reason this could be a huge win for Facebook is that this step could make Facebook more core to the mobile device (and seemingly appear more and more like just part of the OS). If you have the app installed, and miss a call, I would expect the missed call notification screen to be Facebook's Hello - with the normal stuff you would expect - so and so called you, return call, send message etc - which will inevitably give FB the hook to drive users to FB messenger, WhatsApp etc - This is a chance for FB to hijack the core functionality of the phone and drive traffic to its other properties, quickly FB messenger could become the default messaging app.
Your phone as your identity & network
This is something that I have ranted about before - there are two powerful and fairly unique traits of mobile phones that have the power to really disrupt the social/technology/online space:
Your phone is your identity - Whilst people continue to struggle to fix online identification/authentication issues, with a host of different providers offering Login-as-a-Service (Twitter, Facebook etc) and lots of people complaining about the proliferation of user logins/passwords that need to be remembered, the phone offers an interesting solution to that - Granted, phone numbers are not for life, but they offer simple, unique identification of individuals, plus, with two-factor authentication, it can be simple to verify that the person attempting to login is in physical possession of the device. And with more moves to ApplePay and NFC payment with your device, this identity/device becomes even more tightly coupled.
By Facebook tying your phone number with your profile it is an impressive move to help future proof their platform: so your phone is your identity? Well now your FB profile is intrinsically linked to that too.
Now, mobile phones change that a bit. Traditional online social-networking basically just models the real world network of friends/colleagues/etc - In your real life social network, you are the node in the graph, and your mobile phone basically represents your node - If you think of Facebook as a centralised social network, mobile phones are a distributed social network (in other words, Facebook knows about the entire graph, and keeps that information centralised, but with your phone you know about your immediate neighbours in the graph - e.g. the people you have contact details for, but not the rest of the graph). This is a pretty powerful idea - and this is what has made it possible for apps like SnapChat and WhatsApp to enjoy sudden and un-precedented user growth where non-mobile only apps (Google+) haven't.
If we add to that the fact that modern smart phones aren't just an address book - they have your photos, they have your videos, they have your messaging, they have your friends - is there much on your Facebook profile that you don't have (the ability) to have locally on your mobile phone?
All of this makes the smart phone and the real world mobile connections a very powerful platform for anyone to come and disrupt Facebook's crown - So this move by Facebook again just helps establish them as leading the mobile-social platform, not just an old internet company trying to compete.
An aside - Google needs to catch up
My original thinking for the blog was going to be about how Google should, in my opinion, be capitalising on the Android platform as a social network, and rather than trying to convince users to sign up to Google+ (or Wave, or Buzz etc) focus their efforts on making Android a more social OS and make more of the Android as your identity. They would have to do it carefully with regards to stuff like "private by default" so not to cause uproar, but if they could effectively make all their Android users a node in the social network, then all of a sudden they could find themselves with a pretty good social network, and can start thinking about how to add value to the product. Furthermore, with Android being the OS (as low down the stack as possible) then they would have a lot more options with regards bringing together all the aspects above - Your smart phone knows instantly when you take a photo or record a video (because you are doing it with the device!), it knows your location, it knows when/who you are messaging, it knows who your friends are - some nice usability around that and it starts to sound like a very strong value proposition!