the kernel itself is about 1MB.
There was also BeOS and Amithlon [1], AmigaOS running on x86-32 (IIRC booted up with some patched Linux kernel). Archive.org supposedly preserved this. [2]
20 years ago, one could run a Linux firewall on a floppy. One good thing about that, is that you could have a floppy physically put to read-only mode (SD cards also have this feature).
https://schierlm.github.io/OberonEmulator/
The original Oberon system was something like 12,000 lines of code, something you could imagine reading in its entirety.
IIRC most of the Linux kernel source code is device drivers; the linux kernel also has a huge amount of functionality, much more than you need just to boot a PC into a GUI. Much of Linux user code is bloated libraries with a good deal of duplicated functionality.
Many GUI-based systems from the 1980s and 1990s were very compact by modern standards. (Even a full Smalltalk-80 system image is less than 2MB including the source code.) You can still run RISC OS on the Raspberry Pi to try out a 1980s/90s-style PC OS. Classic text-based UNIX OSes were obviously also dramatically smaller than modern Linux distributions.
Regarding device drivers, I wonder if the BIOS approach is better - assume the hardware vendor supplies the device drivers, and let the OS use those drivers rather than supplying its own. Someone will probably argue that "oh legacy BIOS is 16-bit, doesn't support [caching/acceleration/scatter-gather/async/polling/ feature x] or hardware vendors don't know how to write drivers or it's closed source or blah blah blah" but that would be missing the point that the idea of separating the driver subsystem from the OS might not be such a bad one.
It's not so much fat as it is feature support and what's enabled by default. Most people want the "default" configuration to work out of the box on whatever computer they have. E.g. If you take a look at "x86_64_defconfig", nearly every Ethernet card that Linux supports is enabled. Odds are you only have one of those in your (desktop) system. However, unless you shopped around for specific NICs, odds are you don't own two systems that use the same ethernet driver.
For those of us who want to only compile the support for exactly what we use, it is still possible to compile the kernel small enough to boot off of a 1.44 MiB floppy with a minimal initial ramdisk, assuming the system you want to use it on is old. Modern systems require so much more code to use the hardware in them, and as Linux has become the single most used operating system kernel on the planet, the amount of code for device drivers has grown astronomically.
The kernel contains a minimal configuration called "tinyconfig" which turns off literally anything that be while retaining a functioning kernel. A tinyconfig kernel + TTY support compiles to about 500 KiB. Enabling all of the drivers to support hardware via the BIOS (AT style disk control, floppy, display out, etc.), and ELF support will yield a kernel of ~790 KiB, a little more than half of your 1.44 MiB floppy. Assuming you can fit useful userspace tools in the remaining space, you could still load from a floppy.
Um, perhaps support for all of the hardware, filesystems, network protocols, etc., that did not exist?
If you actually want to boot that on real hardware, you can enable the drivers that are stubs into the BIOS calls for classic devices (disks, serial ports, SVGA graphics, etc.) for another ~100 KiB. It's extremely limited though - no specific PCIe support, ACPI, networking, etc.
Text-only, however, unlike the QNX demo.
Why is the kernel so fat ?