While Millennium Edition is mostly remembered as a disastrous hell pit: it did try to roll up quite a few odds and ends. That’s probably part of why it was so buggy, and XP had more time.
To be fair the Windows 9x line probably brought their operating system as far forward as it could really go without dropping the relationship to MS-DOS. A compatibility issue of decreasing importance by the time 98 SE reached customers, and more and more software came to expect a 32-bit Windows and modern memory management units.
XP is itself long post it’s throw out date: but was definitely a step in the right direction. Part of me remembers it fondly because it was the first time we really had a computing environment that could play games, and want e limited by outdated hardware. At the same time the shiny of business as usual left me ready for a unix environment long beds XP itself became outdated.
Part of me rather wonders what the modern desktop might look like if Microsoft would of had as much ownership of Xenix as they ended up with NT. At least few of us really need MS-DOS or 286 compatibility today as much as we may want Windows 98 or XP compatibility.