As I said above, OpenSolaris is dead. illumos is a fork. We don't take code from Oracle, because there isn't any. If they'd kept the gate open, a fork probably wouldn't have happened.
As for why not to just move from Solaris to FreeBSD... because they're totally different beasts? And we happen to like Solaris? :-)
Porting KVM to Solaris was apparently quite non-trivial:
OpenSolaris has been dead for two years. illumos is a fork of the source code repo that made up the OS and Net consolidations from Sun. Oracle closed the gate shortly after the acquisition, with the promise they'd drop code after Solaris 11 was released. This has not happened.
OpenIndiana, SmartOS and OmniOS are all distributions of the illumos kernel and associated libraries and programs.
OpenIndiana is geared more towards desktop users (though it can be used for servers well enough). OI is funded primarily through everycity.co.uk.
SmartOS is a PXE/USB booting server operating system, where all services are meant to be encapsulated in zones and KVM. SmartOS zones use pkgsrc for packaging (via pkgin). SmartOS is useful for building clouds, for instance. It is the core of Joyent's SmartDatacenter product.
OmniOS is a more traditional server operating system in that you install bits on metal, use IPS for packages, and have an upgrade path other. OmniOS has been used in production inside OmniTI for a while (as I understand it), but is the newest player on the block.
As with Linux distributions, each distribution above has different operating and development philosophies, but they all push code back up through the illumos gate.
Sun is dead. Oracle ate Sun, took their ball, and went home. illumos is the successor of the OpenSolaris idea (sans asinine governance model), and the core of open source Solarish distributions.
[0] https://github.com/joyent?q=manta