Windows should have a "minimal install" option were it only installs the base operating sysyem and not much else. That's why Windows XP/7 will always be the pinnacle of Windows releases in my opinion.
It does, but Microsoft doesn't consider that level of minimalism to be an "end user" use-case, so it's not an option available to end users to install.
Instead, in Microsoft's minds, this is a use-case exclusively of interest to embedded-device system integrators (i.e. the people building the world's ATMs, billboards, gas pumps, slot machines, ticket kiosks, etc.) So that's how they market it: https://developer.microsoft.com/en-us/windows/iot/
Make no mistake, though, you can just download and install Windows IoT Core onto any random PC; and (mostly) arbitrary Windows apps can be installed and run on top of Windows IoT Core.
The only proviso being, that IoT Core is maybe a bit too minimal for your use-case: IoT Core assumes you don't need a desktop (because you're likely remotely managing the device, and deploying a full-screen kiosk-style app that isn't meant to be broken out of.) It still has a graphical "control plane" shell sort of thing, but it's entirely built on the Metro/UWP UX, with no ability to launch programs in windowed mode. (Essentially, there's no window manager running.) I believe this means that Win32 apps that try to spawn multiple windows (e.g. old versions of Photoshop that make the palettes their own windows), won't work on IoT Core. Most modern stuff avoids that, though.
I would note that this "remote-deploy and boot apps in fullscreen, with access to Win32 but not GDI, graphics only though UWP" paradigm, closely mirrors the experience of using an Xbox One in developer mode. I bet the "distro" of Windows used between IoT Core and the modern Xbox are near-identical.
Many standard Win32 widgets, such as context menus and tooltips, are themselves top-level windows - so if Core doesn't support that at all, it would break a lot more than just Photoshop.
I would disagree, insofar as one of the use-cases for IoT Core (and Windows Embedded before it) is for developing kiosks that run arbitrary single apps. That could include e.g. a tablet that only runs Photoshop.
But the assumption in those use-cases is that you as the system-integrator are either also the developer of the app being embedded, or at least have access to the engineers of the ISV who developed the app; and so you can get the app recompiled [and potentially slightly rewritten in the process] for the target profile (UWP) that IoT Core supports. IoT Core doesn't support just taking arbitrary Win32 GDI apps and kiosk-ifying them.
...but Windows IoT Enterprise does! IoT Enterprise is just Windows Pro LTSC but with IoT Core's virtual-appliance versioned-image deployment and management process. You can totally kiosk a "legacy" Win32 GDI app using IoT Enterprise. That's what a lot of modern billboard manufacturers and the like are still doing (until they finish redeveloping their signage apps for IoT Core), which is why you'll still sometimes see e.g. an airport terminal sign sitting around on the Windows desktop when its kiosk app failed to boot. That's an IoT Enterprise deployment.
But IoT Enterprise isn't any more minimal than Pro LTSC, it's just different, so it wasn't really the point of the discussion here. If you're a home user putting Windows on your own PC, you'd want to use Pro LTSC, not IoT Enterprise. (Unless "your own PC" is your RaspPi that you're trying to set up as a smart-fridge weather widget or something. Then maybe you do want IoT Enterprise.)
