I was puzzled by that too, but from what I've read there's a tag defined in the Mobipocket format that specifies whether something is a "book" or a "doc". Previous Kindles (and, apparently, a lot of ebook generation software) ignore this, but the Kindle Fire does not (possibly "doc" is the default if the tag is not present -- unclear on this). You can supposedly fix the tag using Calibre, but I haven't bothered. Now that I know where they are, it doesn't really bother me.

I don't think the criticism wrt AVI is appropriate, either. I wouldn't have expected it to play AVI, and in fact am somewhat surprised that anyone is still using that as a distribution format. As a format for editing, it's somewhat understandable, but it's not the best choice for media distribution/consumption and hasn't been for quite a long time. Why would you expect a random Android device to play an obsolete/obsolescent proprietary Microsoft format?

I like the Fire, personally. It's not going to replace my iPad or eInk Kindle, but it sure is handy for reading in bed.