No, that's not how it works with WSL2 as the backend. You then cannot configure a smaller amount of RAM in the docker app, it's greyed out. One can limit the RAM that WSL has, but that's not really helpful when docker steals all of it. (And WSL2 supports dynamic allocation of memory anyways, so it's supposed to return unused memory to the host)

So you are wrong. For those of us affected by the bug, it's a big issue.

You can configure the max memory in wsl 2 with .wslconfig file.

yes, but docker will eat whatever I give to it, leaving nothing for the actual containers or other stuff in wsl

Linux considers unused RAM to be wasted RAM. WSL 2 addresses this with a Linux kernel change that right now is insiders only. I expect it to land with Windows 11.

That's not how virtual machines work on Windows. Even Linux virtual machines use dynamic memory. You assign a minimum, maximum, and a startup value. When the machine needs more RAM, Windows give it to it. When it releases it, it's available for other purposes.