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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.

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.