"Running $N containers as separate WSL instances runs $N VMs and $N linux kernels."

But it doesn't, and this is what I'm disagreeing with.

If you instantiate WSL2, it launches a Linux VM. A single Linux VM. If you then run Docker with WSL2 integration (the default and hugely recommended), it uses that Linux VM as its VM as well, so you're still at 1 VM.

If you run 100 WSL2 instances, they will all use that single Linux VM, each doing namespacing for isolation with their own filesystems. If you run 100 Docker instances, they will all use that single Linux VM.

If you run 100 WSL instances, and 100 Docker instances (assuming, again, WSL2 integration which is the default), they will all be using that single Linux VM.