Back then pretty much every high end phone had that... The IPhone wasn't anything special at that time. The IPhone really took off then they allowed 3rd party apps.
LG had more than a dozen phones with touch screen (resistive) at that time that had "apps" but no third party apps (except for JavaME apps).
The game changer (as the linked site from Apple states as well) was an App Store allowing direct access to third party apps. And that's what created another modern tech revolution.
No. The point of a smartphone is to expand the scope of what can reasonably be done so they it can be considered more like a computer than a dedicated device with a narrow, defined set of capabilities. Jobs was right that the quality of the iPhone's browser was sufficient to raise it to that level.
Of course having 3rd party apps raises it to another level. It would have been a death sentence if the iPhone proceeded for too long without them while competitors developed a robust app ecosystem but that was never the plan.
The very defining feature of a smart phone are the apps, though.
EDIT: Due to downvotes, here’s Apple’s own page advertising how iOS 2 (introduced with the iPhone 3G) adds apps to the iPhone: https://web.archive.org/web/20080912112138/http://www.apple....