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As long as it works, does it matter?

Yes, because you get the performance overhead of a VM

Containers are good old userspace processes in comparison scheduled by the kernel you already run

You can also run flatpak in a linux vm, and use X11 to see it in Windows, so how is this different?

Is that still true for WSL2?

WSL1 was not a VM. WSL2 is a VM.

Windows based containers do exist. Docker for Windows can run both Linux (a VM) and Windows applications. If I'm not mistaken, both are implemented via HyperV.