Everything is running in dos... Inside a dosbox window I should say.
I copied this gui setup to my ancient superdos machine (pentium 200mhz) it works well stand alone as well, on top of freedos as the actual DOS/OS.
Wait that sounds confusing... I should say this gui works well on top of msdos or freedos on an actual machine, or just as well virtualized in dosemu or
This gui desktop is just a pretty shell. When you click on an icon, the dos program related to the icon starts. When you end that program, it goes back to the dos desktop shell you see here in the screenshots. Everything runs in the same window/dosbox instance, but only one program can run at a time.
I have run multiple instances of this dos desktop on vectorlinux at once. In that case you just point and click whatever you want in each window.
Setting up icons is easy, just define the icon, and put in path to exe and exe file...