Did it now? afaik if you only had one drive, and one partition, and had Windows installed there, and you didn't have enough free space, you lost everything. That's not exactly niche
Note that the reason that Microsoft failed to address it is because while a Feedback submission had been made, it didn't have any upvotes, because it was so niche that almost none of the Insiders experienced it. Despite the fact that Insiders are the sort of power users most likely to have fiddled with weird features like folder redirection.
Details are here: https://blogs.windows.com/windowsexperience/2018/10/09/updat...
But maybe you're referring to another bug.
Searching around for some sort of source, I found this article[1], which says "...some of my readers told me their hard drives were corrupted and thus were unable to roll back the update." Of course this may be hearsay and false information in times of panic, so I take the statement with a grain of salt.
[1]https://www.forbes.com/sites/jasonevangelho/2018/10/06/micro...
I seem to recall reading that the "improper use" in this case could also consist of using a program that hard-coded paths and was not aware of folder redirection.
All up, I think data loss was probably uncommon, but not rare. And data loss of such things is always severe.
These are one set of steps to be effected by the bug.
1. Have a primary hardrive that is nearly full.
2. Get a second hard drive to store more pictures to your machine.
3. Change My pictures folder location to save on the new hard drive. (The least likely step but not super unlikely if your searching ways to stop your primary hard drive filling up)
4. Click no when asked if you want to copy everything across to the new location (ignoring it saying it's recommended (but only so you can see your older photos easier))
5. Have the update roll out and delete all of the old photos you had.
Losing those old photos (perhaps of passed loved ones) you may not have anywhere else can be heartbreaking. The fact that a very small percentage of users is effected does not change the fact that as we're talking about a massive user base, the absolute number of users is always going to be high.
I am certainly not undervaluing the consequences. Data loss is always huge, but I would say, comparatively, the likelihood of losing your data to this Windows bug pales in comparison to say, getting locked out of your Google Photos account and having no way to appeal. (I have a friend who is unable to get into a Google account with correspondence from a deceased family member.) I don't feel like Microsoft is even close to the industry worst in putting your data at risk because of this bug.
And with regards to the massive user base, bear in mind, this was caught in the very early stages of a slow, phased rollout process, explicitly for this sort of reason. So it was a small percentage of a very small rollout to begin with.
That being said, Microsoft's month-to-month patch reliability has been absolutely terrible. While not causing data loss, the monthly updates have been regularly show-stopping of late, and anything that gets Microsoft to realize it made a mistake on axing it's testers (and removing the ability to cherry-pick security fixes) is something I can stand behind.
[1] Complete aside, I have actually heard of someone applying version control to the folder that contains the Windows registry, and being upset at Microsoft that it broke their PC.
[2] Linux is not a company, and truly open source platforms do some amazing things for long term support. I think they just dropped support for 386 processors a couple years ago.