Illumos is not just the kernel, it's a complete operating system - as is traditional in UNIX. This idea that you get a kernel from somewhere and a libc from somewhere else and a init from a third place etc. is quite unique to GNU/Linux.
I think it's not ideal to use the term "distribution" for their downstreams like SmartOS etc. because it reminds people of all these GNU/Linux distributions, but a better term doesn't immediately come to mind...
The OS is packaged the same way Linux is, with different distributions maintained by people outside the kernel devs.