Linux

Yeah. Linux is also optimized to run well. Has a capable community and a few good design choices. Many people use it to run it on servers so I wouldn't be surprised if it performed well well on servers.

Also there is a well known fork that is used on millions/billions(?) of ARM phones. So it'd better be a good choice for that use case.

Microsoft absolutely could have made something comparable to Rosetta 2 for userspace if they were competent.

Rosetta 2 isn't an emulator, but a binary recompiler. It takes amd64 instructions, decodes them, and generates equivalent aarch64 instructions. The aarch64 instructions are then executed directly by the processor, performing the same tasks that the original binary would do on an Intel processor.

It's extremely difficult to do properly, but it's nothing inherently special to MacOS or Apple's ARM chips. ARMv8 has an attribute to enable strongly-ordered memory accesses, and it also supports native 4 KiB page sizes. Beyond those two solved concerns, there isn't any actual hardware barrier preventing binary translation. Individual amd64 instructions can be translated into one or more equivalent aarach64 instructions, and complex instructions or those using large registers like those in AVX-512 can be shimmed and implemented in software. An offset table can be used to deal with indirect jumps, and direct jumps can just be rewritten in the generated code. And as Apple has proven, it's even possible to support JIT-compiled code by intercepting jumps into executable pages and recompiling them before executing.

It's expensive in terms of time and engineering skills, but Microsoft had more than enough control over their own proprietary kernel to build something similar into Windows back when they first released it for ARM.