The number of times I’ve had to reinstall Windows, it just makes sense to have it isolated so I don’t lose any data.
Except, I inevitably do because Windows finds a way to have files saved and programs installed where I don’t want them.
It will install the OS itself in read only mode (and encrypted) onto a dedicated APFS Volume, with all the data on a separate APFS Volume, both sharing the same container representing the entire boot drive.
As a user you will not notice at all unless you go looking.
This is mainly for security reasons, as I understand it. But, surely this also makes an OS reinstall or recovery much simpler. I have not yet had the luck to need to do either since this installation model was adopted so I don't know what the impact (positive or negative) to the user is in such a scenario.
Anyway, I find it amusing that such a model has only recently been adopted by a mainstream OS after so many decades of the concept being espoused as important in the general Unix-like world. I wonder if Microsoft will follow suit.