Microsoft is losing Builders fast. They’re switching to MacOS and Linux. The biggest pull keeping people on Windows, outside of shear inertia, is content creation and gaming. However, even these are falling to Linux.
Without Builders, you don’t have software, and without software, you don’t have users. This is why Microsoft needs Windows Lite.
But there is, and it’s called Linux Mint.
Does it run Windows applications?
It does run many Windows applications using Wine, although not all of them.
I feel like you’re saying no, but with extra steps
Even windows doesn’t run all windows applications, so I think it’s bad to judge that way. Hell, windows doesn’t even run itself properly half the time.