with all due respect i disagree. I maintain that the limit does exist and has the suggested value, at least with the usually accepted definition of limit as found in what I consider standard books. the confusion is that for a limit to exist as (x,y)-->(0,0), one takes for granted that the values (x,y) only approach (0,0) along points where the function is defined. So even though the function is not defined on a line through (0,0) this has no effect on the value of the limit. i.e. for all epsilon, there is a delta such that for all (x,y) which are both within delta of (0,0) and lie in the domain of definition of the function, the value of the function at (x,y) is within epsilon of zero.
the only restriction usually made on this definition is that the point (0,0) should be a limit point of the domain. Here it is so. I.e. there is no problem with the function being undefined somewhere on every neighborhood of (0,0), rather the key is that it is defined somewhere on every neighborhood of (0,0). The reason for preferring this definition is that it let's us try to extend a function such as that given above to its full maximal domain of definition, in this case the whole plane. I.e. the given function has a well defined limit not only at (0,0) but also at every point of the line x= -y and all these points are removable discontinuities.
see e.g. page 36, chapter II.2 of Lang's Analysis I for this more precise definition of a limit of a function at a point which he requires there to be "adherent" to the domain, i.e. approachable as a limit of points of the domain. the same definition is given on page 126 of Advanced Calculus by Loomis and Sternberg.
An interesting question arises however in this context: suppose a function is undefined on an infinite subset of the closure of its domain, and suppose that the function does have a limit at each of those points. If we redefine the function to have as value the limit at each of those points, will the redefined function be continuous? Note that this is not entirely obvious since now we must check whether the new values of the newly defined function also converge to the other new values. i.e. each new value will of course be the limit of the values of the original function, but now we must also check that each new value is also a limit of those new values which are assigned to points near our point at which the function was originally undefined.
e.g. is it possible that a function could be undefined along the line x = -y, continuous elsewhere, and have a limit at each of the points of the line x = -y, but that the function defined on the whole plane by using those limiting values is not continuous? I.e. could it be that as we approach (0,0) along the line x = -y, that the limit values at those points do not approach the limit at (0,0?
I.e. is the existence of the limit of a continuous f, at every point of the closure of its domain, equivalent to the existence, as happens above, of a continuous extension to the whole closure of the domain? (It appears to me that it is but I did not write out the proof.)