I think I need to use $(x+y)^n = \sum_{k=0}^n {n \choose k} x^{n-k} y^k$, but I can't figure out how. I am trying to see why
$$\frac{y!}{x!(y-x)!} \lambda^x \mu^{y-x} / \sum_{x,r:x+r=y}\frac{y!}{x! r!} \lambda^x \mu^r$$
is the same as
$${y \choose x} \left(\frac{\lambda}{\lambda + \mu} \right)^x \left( \frac{\mu}{\lambda + \mu} \right)^{y-x}$$
But can't see why
The numerator of your LHS is by definition of ${n \choose k}$ equal to $${y \choose x} \lambda^x \mu^{y-x}$$ The denominator can be rewritten as: $$\sum_{r=0}^y {y \choose r} \mu^r \lambda^{y-r} = (\mu+\lambda)^y = (\mu+\lambda)^x (\mu+\lambda)^{y-x}$$
Now if you take a ratio of the simplified numerator and denominator, you will get the desired answer,