There is a lot of stuff that window managers could in theory do (e.g. something i'd like Window Maker to be able to do is "combining" windows so that the title bar becomes a tab bar that contains multiple windows in the same screen space region) but in practice never end up doing for whatever reasons (i could in theory spend the time to implement such a feature in Window Maker but it is very low in my priorities for whenever i have time to spend). And more importantly, not everyone has the same window manager, so even if my window manager could provide a feature that made some application feature unnecessary, someone else's window manager might still not provide it (but might provide some other feature they want that mine doesn't).

> The only applications that really need MDI are those that do something with their windows other than window management, which (loosely) implies that those things are something other than windows.

Well, in the example of image editors i mentioned, these windows are views to the underlying image documents - and being able to move and resize those views arbitrarily, together with a caption about the document they're about, is very useful. It also matches perfectly with embedded/MDI windows.