Windows 7 introduced "Windows XP Mode" which was a container running a virtualized Windows XP for applications that didn't work correctly in 7. But since they also had the per-application compatibility settings, it wasn't the first pick for most users.
While it's a good idea on the surface, it still means they have to maintain compatibility code within that virtual system. Perhaps if they separate it well enough, and it has a dedicated team, while the core OS team can focus on a slimmed down, "current stuff only" version... but I suppose it's also hard to know where the line is drawn in the sand.
Still a lot of reason to wonder if they had found a way to deliver the UWP platform earlier to Windows 7 ahead of 8's launch and got more applications up front of the transition if that attempt might have gone much smoother.
Unfortunately for them, most of my biggest complaints about Windows 11 are the places where they most broke backward compatibility and dropped "cruft" that I loved. The biggest example is that the inability to move the taskbar to a different side alone is a stupid removal that I'm sure removed a lot of ancient backwards compatibility cruft in the taskbar code, but that's something I've used on every machine under my control since Windows XP and its loss really doesn't make sense to me.
They very much do. Windows software use all sorts of legacy Win32 APIs, even if they have trendy new GUI on top. (and UWP is practially dead and not used by anyone)