It's a full VM running via Docker. The Windows apps are presented via RDP's RemoteApps protocol via FreeRDP.
There's also WinApps, which is the same thing but without the docker container, and it supports a remote VM as well: https://github.com/winapps-org/winapps
WinBoat uses Docker (specifically the dockur/windows container) to simplify the backend setup. The Docker container hosts QEMU and all the configs to automate the whole "create a VM, configure it, install Windows, configure it etc" process.
There's also WinApps, which is the same thing but without the docker container, and it supports a remote VM as well: https://github.com/winapps-org/winapps