logo silverlight smoke

How does one create a logo like Silverlight logo?


1. I wonder how does one create a logo like Silverlight?
2. How should a strict BW version (not grayscale bit pure BW) look like ie. for vinyl cutting?
3. Which tools to use to create a scalable version of it other than creating a huge version in Photoshop?
4. Should logos like this be placed on a strict grid or are they more soft flexible (therefore harder or impossible to reproduce from scratch)?