> no continuous disk activity from a hundred background processes
That's because the computers at the time simply couldn't handle that kind of load. Things like telemetry and feature-usage tracking would have been things in the mid-1990s if we had the spare computing overhead space and persistent Internet connections, which we didn't - but now we do - so we have them.
> the IE5 icon looks remarkably close to the Legacy Edge one --- it's just as flat --- and the VM shuts down in around 1 second.
That's because you're likely in 16-color or 256-color mode instead of high-color (16-bit) or true-color (24/32-bit) modes - the desktop IE logo has never been flat-colored, though the logo itself is flat-colored in many places in Windows 98, also lets agree that the IE 7 logo is the worst IE logo ever.
> and the VM shuts down in around 1 second.
That's because it's a VM on modern hardware - on period-correct hardware it will still take Windows a while to boot and to shut-down.
Though while Windows 9x does shut-down rather quickly, there's a reason for that: it doesn't have the same OS and filesystem consistency protections that Windows XP and later had: there's a reason we all typically reinstalled Windows 98 every 6 months or so: things break easily - whereas my current laptop hasn't had Windows reinstalled ever in the 4 years I've had it.