This is actually a big one for Carlo ancelotti because i am quite sure that this is his last contract in his coaching career, and considering his age, it's logical to say that national team football is what's best for him now because he would have a lot of time for himself and his family, unlike club football that comes thick and fast, so it's a welcome development and a big one for him.
Then as for xabi Alonso potential move to real madrid as Carlo ancelotti successor, that's not guaranteed yet because I sees him as just one of the candidate that are being speculated to take over that post, but time will tell if he is the ideal person real madrid will sign or not, because I know that jurgen klopp is also in the picture to succeed carlo ancelotti at real Madrid.