Multitasking OSes? Nope - not in the early-mid 1980s.
You want to use another app? Save your work, quit your current app and launch the new app.
Cooperative multitasking eventually arrived, but if you didn't have enough RAM, it would be painful to switch amongst multiple apps.
Then there's the cost of the apps. You want a word processor? ~$250. Spreadsheet? Another ~$250. Presentation app? guess what? Another ~$250.
Or you can buy one of these new-fangled integrated apps that include word processor, spreadsheet, graphics, database and some other stuff. These integrated apps were jack-of-all-trades going for the 80% functionality that people needed. All for the price of one of the dedicated apps.
AppleWorks, MS Works, Ashton-Tate Framework filled a need at the low end.
There were always going to be users who didn't want/need the full functionality of a typical dedicated word processor/spreadsheet or didn't want to pay for features they didn't need/use.
Once Excel was fleshed out and MS bought Powerpoint, the Office suite of apps was born, priced at less than the total cost of the 3 individual apps.
The standalone desktop apps were living on borrowed time.
Microsoft Works was always an odd duck -- a cut-down relative of Office (except not actually Office) for home users. Merging this into Office was a sensible decision that should have happened many years ago, TBH.