WSL 1 is a compatibility layer that lets Linux programs run on the Windows kernel by translating Linux system calls to Windows system calls, so in that sense I understand the name: it’s a Windows subsystem for Linux [compatibility]. It doesn’t use the Linux kernel at all. With WSL 2 they’re using a real Linux kernel in a virtual machine, so there the name doesn’t make much sense anymore.

And it does proper split DNS by default, using the search domains of each interface. That way you can configure a global DNS resolver while still being able to resolve local hostnames and without leaking other queries. I just hope they’ll also add DoH support, which is less likely to be blocked on a corporate network.