Up until this feature was added, processes in NT were quite heavyweight: new processes would get a bunch of the NT runtime libraries mapped in their address space at startup time. In a picoprocess, the process has minimal ties to the Windows architecture, and this is used to implement Linux-compatible processes in WSL 1.
They sound like an extremely useful construct.
Also, WSL 2 always felt like a "cheat" to me... is anyone else disappointed they went full-on VM and abandoned the original approach? Did small file performance ever get adequately addressed?