It didn't extend to use cases like containers, that would have basically required MS to rewrite large parts of the Linux kernel's core code for namespaces, mount points etc.

Sure. Running a Linux VM (WSL2) just to use containers seems to kind of defeat the point, though. You might as well just run your containers in VMs.

The use case is for developers to use their Linux tools with Windows integration. WSL1 only did the latter half well, "traditional" VMs only did the former. WSL2 does both, however that brings both advantages and disadvantages of VMs.