The big achievement of DOS and the 8088 was relocation during loading. For .COM files, this was easy: the program was segment register relative, you pretty much had virtual memory. For .EXE files, MS-DOS relinks all of the absolute segment addresses during the load process.

So this means you could have multiple programs loaded at once: often done with TSRs (terminate and stay resident programs), but it also allowed things like shell windows in Lugaru Emacs (Epsilon) to exist. Languages like Turbo-C had system().

Also the OS was well decoupled from the application programs (it could be independently updated). This was not true for many of the other home computers of the time, but some pulled it off: all CP/M systems and TRS-80. I think the main exception to this was the video system- many programs made assumptions about the address of the screen buffer.