Would you mind if I break it in parts?

> Windows 98 Second Edition is terrible in many ways. I could probably hit the comment limit listing them.

Strong evidence it was not that good.

> Yet it remains my favourite operating system of all time, because everything else (yes, even precious Debian!) is just worse. Worse UI, worse memory use, worse hackability…

In terms of UI, yes, very clean UI by default. You can reach that level today but not out of the box. On the other side, it came with very few programs installed, so you had to install third party apps and consistency went to the trashcan once o did that.

Memory management... we have memory control groups today, I can install and remove swap files and devices with the system running, oomd saves my desktop virtually crashing when under memory pressure, I can use compressed memory... I have to admit that amount memory usage is way larger today and, albeit with third party apps, you could have compressed in win9x but it didn't went far.

Now, there's no way win9x comes even close to debian in terms of hackability. You can easily install compilation dependencies and sources of most packages, modify, compile... I don't even want to argue about this.

> In Windows 98 SE, there was a button next to “minimise” that would give every widget a tooltip explaining what it did and how to use it; most programs came with a built-in, GUI instruction manual. Nobody else does this! (The best help UI ever made, and Microsoft just dropped it…)

Current tool-tips in clickable items removes the need of such feature. Self explainable text boxes also. If you need a '?' widget to get help on other widgets, I'd consider the UI is not obvious enough and should be fixed.

> Windows 98 SE included its own kernel-based virtual machine system, which it used for multi-tasking DOS and “sandboxing” DOS drivers. (They had a global lock and full privileges, though, so it's not really much of a sandbox.)

Extremely unsafe and unstable! No separation between processes' memory and hardware access. UNIX had that since the 70's. The 80386 had such features since early 80's. It is hard to find a good reason why a popular OS in late 90's had no such feature. It was fixed when xp was released by using the nt kernel, but it was 3 decades too late.

> Windows 98 came with Active Desktop: you could display bits of website on your desktop as widgets (e.g. a weather service). It also came with mshta.exe, for HTML Applications; HTAs were basically like Electron, but built into the OS, so you didn't have loads of insecure Chrome versions clogging up your RAM and hard drive. (It was Internet Explorer, but iirc Internet Explorer was actually good around about that time.)

By "widgets on the desktop" it meant "ads". Most people simply disabled active desktop, it was a major waste of resources and minor source of instability. I admit that electron apps eat too much memory, but I think it is proportional to the amount of RAM available these days. I don't think things got worse in this area over time.

Also, IE had its fair share of memory leaks, vulnerabilities and instabilities.

> Yes, it was DOS-based. Yes, you could log in as the system user by clicking “cancel” on the “enter your username and password” box. It should be simple to beat that… so why hasn't anyone?

It was beat. Just read above.