This was for the entire distribution, not just the OS (including ALL the developement tools, Emacs, TeX, etc).
The kernel itself is 1526722 lines of code, and XFree86 is 1291745 loc. SO yes, it is large, but that's what happens when you support every imaginable bit of hardware on the planet. It would be simple to trim that down if Linux/XFree86 supported say five network cards, five video cards, no USB etc.
Essentially you are comparing a real world operating system and all it's applications to an experimental system that works on a limited set of hardware.
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