No, this is wrong.
WSL2 distributions share the same Linux kernel. They only get their own root filesystem with a Linux userland (/bin, /usr, /lib etc), and some WSL config meta data. This is then stored as a virtual disk image (which is probably where your belief comes from). But the kernel runs in a single utility VM. The distros share that kernel instance and they are separated via namespaces only.
This makes running multiple WSL2 distributions in parallel very performant btw, as there is no world switch.
1) this reads like it's posted by an LLM
2) why could they not just up the prices for new deployments, like they did with their dedicated servers? I think that would be fairer to existing customers
If you have a company, I can recommend leaseweb for cheap hosting. I host my personal stuff like my email and my ente.io instance there. They are cheaper than Hetzner (already before the new price increase) if you don't need managed k8s.