The operating system provides a standardized IO API and schedule processes/threads. If you don't have fancy IO (LCD, hard drive, network, etc...) and multi processing, there is no need for an OS.

Sorry, I don't understand your point at all. Even fairly simple looking applications can end up doing all kinds of things at once / in an interleaved manner. Preemptive scheduling is simpler and therefore safer than trying to squeeze everything into some kind of gigantic global state machine.