g/It uses windows itself as the window-manager/s/uses/can use/
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Last I checked (2000/2001) this was configurable. You can run either a "rooted" (X Windows managed, eg: using twm, Motif, WindowMaker, KDE, etc.), or "rootless" ("native" MS Windows managed X apps) mode. Latter is useful if you want to toss an X app onto a Windows desktop. Former is preferred by those who like a real desktop environment. XWin32 will run either way, as will Exceed & Reflection X. Cygwin only runs rooted, though it can do fullscreen or windowed versions of this.