Earlier quoted context omitted.
Emacs is not just an editor and mention it next to vim or mutt indicates that you misunderstand what Emacs tries to be. Emacs gives you tight integration for everything that could possibly be represented as a buffer. Emacs is programmable glue between applications, a better "shell". The desire to do all things in Emacs is because Emacs lets you do it and because it reduces context switching. For more on why one would…
I get the point about Emacs being a OS, but don't you think it's kind of a dated clunky OS? Like "Mac OS 9" was, lacking memory protection and pre-emptive multitasking. Why would anyone want to be limited by technology when the rest of the world is moving forward?
Emacs lacks a couple of features and I think it's fair to say that this represents a limit, but I don't see "the rest of world [...] moving forward" in this area. I don't know of any other system that is as ambitious as Emacs, a system that embraces the overflowing kitchen sink and isn't content with just being called an editor.
Out of the box it's terrible, I give you that. Clunky and dated are too nice for describing the defaults. But underneath the extremely conservative and curmudgeon defaults lies a very flexible environment that cannot be approximated with a set of text applications running inside a terminal emulator. It's a pale shade of the same colour that made Lisp Machines so attractive.