It would be easier to understand what are x and y and W here if the actual numbers were used, like 784, 10, 55000, etc. In this simple example there are 3 x and 3 y, which is misleading. In reality there are 784 x elements (for each pixel) and 55,000 such x arrays and only 10 y elements (for each digit) and then 55,000 of them.