I don't think they had much choice. I do think they got off cheap, though. At that point Apple was the only thing in the consumer OS space they could point at and call "competitor" with a straight face.
Why does one side have to "win"? I think it was quite obviously mutually beneficial.
Microsoft got out of some potentially costly lawsuits extremely cheaply and got some additional defence for the then-upcoming antitrust litigation. Apple got the immediate investment they desperately needed on favourable terms, they were able to stop spending money on expensive litigation, and they got guarantees over the software they wanted. Both sides also got each others patents, which was probably favourable for both companies as it allowed to resolve any potential remaining patent issues and allow interoperability.
Oh, I'm sure it was mutually beneficial at the time (otherwise the deal wouldn't have gone through), it's just that it seemed to me that Apple was not in a position to dictate terms. GGP makes an excellent point by showing how strong Apples negotiation position really was.
It also sold a lot of copies of Office.