No, it really doesn't. Windows has had backwards compatibility as a huge priority for a long time, often to their detriment. You can literally update a machine from Windows 3.1 to windows 10, and programs written for Windows 3.1 will still work.[1]
EDIT: TO be clear, this is a video of upgrading to Windows 7, and there is a direct upgrade path to 10 from 7. Also, as per another user's reply, this doesn't hold true for 64-bit. However, that doesn't change the fact that Wine doesn't and really can't run win32 better than win32 does.
They made a decision to cut the compatibility but also made the 32bit XP mode VM ship with windows for a transition period (unsure if it's still available). I think it feels like a fair compromise (assuming the VM only causes an overhead for those who need it, but having a whole kernel subsystem for legacy apps might mean security or performance issues for all users)
That's interesting. I didn't actually know that, I figured there'd be some kind of shim in place to make it work. Incidentally, this doesn't mean that Wine runs 16-bit Windows programs particularly well. I did a bit of quick research, and it turns out you need to jump through some hoops to run 16-bit on Wine.[1]
I maintain that Windows is always a better choice for running win32 applications, unless you don't have that option. I'll also note that I'm not saying Wine is useless, or anything along those lines. I merely take issue with the idea that it runs win32 applications "better" than a system that's designed to be backwards compatible with win32 applications by the same entity that made win32.
Both WoW64 and Wine provide an environment that pretends to be 32-bit Windows and presents the Win32 API, but neither one is actually Windows XP. I've had pretty similar experiences trying to run old win32 games on both systems (i.e. it's hit or miss) but Wine has the significant advantage that it will allow a program to think it has admin privileges when it doesn't. Also under Wine, I've had better luck running games from ISOs I've ripped, where I have to insert an actual CD in a physical drive for the program to run under Windows.
[1]: https://www.youtube.com/watch?v=vPnehDhGa14
EDIT: TO be clear, this is a video of upgrading to Windows 7, and there is a direct upgrade path to 10 from 7. Also, as per another user's reply, this doesn't hold true for 64-bit. However, that doesn't change the fact that Wine doesn't and really can't run win32 better than win32 does.