"Is performance still an issue in this era of cheap 486 computers and super-fast Pentium computers? You bet. How many programs that you use really run so fast that you wouldn't be happier if they ran faster? We're so used to slow software that when a compile-and-link sequence that took two minutes on a PC takes just ten seconds on a 486 computer, we're ecstatic—when in truth we should be settling for nothing less tha…
I've had people tell me all of the extra bloat/slowness in modern software is because it has more features, and because accessibility / localization is a thing more often. I'm not sure I actually believe that's true. Maybe accessibility and localization contributes to bloat/slowness, but that doesn't mean it couldn't be much much more efficient and keep the same features.
That's why Windows is the size it is nowadays... it's optimized for delivering the same user experience on all hardware, compatibility, language flexibility, manageability and user friendliness (don't laugh) instead of performance. It essentially performs the same function that Windows 3.1 did, but it does it on a far greater variety of hardware running a far larger assortment of software.
It's bigger and slower than it could be, but there are always trade-offs, and Microsoft hasn't really had any competition in operating systems for decades... Linux and variants have their place, but it's not on the desktop for most people, at least at the moment.