Short of driver troubles at the jump from Win 9x to 2k/XP, and the shedding of Win16 compatibility layers at the time of release of Win XP x64, backwards compatibility had always been baked into Windows. I don’t know if there was any loss of compatibility during the MS-DOS days either.
On DOS, if you borrow ReactOS' NTVDM under XP/2003 and Maybe Vista/7 under 32 bit (IDK about 64 bit binaries), you can run DOS games in a much better way than Windows' counterpart.
Not long ago, it was posted here a link to a job advert for the german railway looking for a Win 3.11 specialist.
As I see it, the problem is the laziness/cheapness of companies when it comes to upgrades and vendor's reluctance to get rid of dead stuff for fear of losing business.
APIs could be deprecated/updated at set intervals, like Current -2/-3 versions back and be done with it.
Lots of hardware is used for multiple decades, but has software that is built once and doesn't get continuous updates.
That isn't necessarily laziness, it's a mindset thing. Traditional hardware companies are used to a mindset where they design something once, make and sell it for a decade, and the customer will replace it after 20 years of use. They have customer support for those 30 years, but software is treated as part of that design process.
That makes a modern OS that can support the APIs of 30 year old software (so 40 year old APIs) valuable to businesses. If you only want to support 3 versions that's valid, but you will lose those customers to a competitor who has better backwards compatibility
