I'd rather say it's was the crashy software running on top of Windows that made it famous. Can't even remember last time I needed to use it for a Windows component itself.
It's been famous for probably longer than you've been paying attention, then. Windows stability has made huge strides over the past 20ish years.
I know, I've been using it for more than 2 decades :P
And I always had the feeling that the amount of crashes due to actual OS bugs is way lower than what the common belief seems to be. Way over 90% of problems I witnessed myself was duewas dues to faulty software, drivers or hardware. And as you say it just got better with most releases which is (just guessing) partly due to less OS bugs and partly due to the OS taking better care of dealing with bad 3rd party software.
Well sure, but faulty software should be limited in its ability to do damage, and I think it's fair to lay some blame at the feet of the OS when it fails to prevent that.
In win98 kernel32 blue screens were pretty common. But I agree that Windows is usually a pretty stable OS with things like 3rd party drivers and software causing most of the issues
Faulty 3rd party software should never be allowed to cause kernel panics (aka BSODs)
That is possibly overstating the case. Depending on demands on performance and/or control it might make sense to sacrifice some stability... but it does count against the stability of the system.