MS didn't get rich by writing code they didn't need to.
(Although the Win 95 upgrade process from the previous blog sounds like an example of code they didn't have to write. I wonder why they didn't have the floppies directly load a "Win 95 PE" environment into RAM then run the installer on that.)
For one thing, I'm fairly sure they didn't yet have a PE environment ready to go; another would probably be a lack of RAM. Installing it to disk first lets you load as needed, instead of all at once.
We're talking about making a single setup program that runs in DOS+VGA. None of that's needed. As for the RAM you can assume minimum requirements for Windows 95. Also C compilers (e.g. Watcom) came with DOS 16M memory extender bundled to use 16MB of it as early as 1989.
(Although the Win 95 upgrade process from the previous blog sounds like an example of code they didn't have to write. I wonder why they didn't have the floppies directly load a "Win 95 PE" environment into RAM then run the installer on that.)