Microsoft is losing Builders fast. They’re switching to MacOS and Linux. The biggest pull keeping people on Windows, outside of shear inertia, is content creation and gaming. However, even these are falling to Linux.
Without Builders, you don’t have software, and without software, you don’t have users. This is why Microsoft needs Windows Lite.
I don’t really know what it is, but I do know that a whole bunch of stuff doesn’t work if you don’t have it installed. That and Java.
It’s just a framework for some code (usually that written in C#) to run on. It’s not a windows only thing either. Just that on Linux if it’s required it’ll just get installed via the package manager, so you won’t see the usual GUI installer that is often packaged with some games (even though you might already have it installed).