A Linux dockerd cannot create a Windows named pipe — that is a Win32 object. So something on the Windows side has to, or every shell and script you already have needs a DOCKER_HOST. FreeWilly is that something.
The pipe is created for your account and nobody else. Full access to the Engine API is full access to the machine, and a TCP port every local process can reach cannot express “only me” — so the hop runs over wsl.exe's stdio to socat and on to the unix socket, with no forwarded port anywhere on the path.
It is the standard pipe name, so the CLI, Compose, Testcontainers and IDE plugins find the engine with no setting. The app itself talks HTTP over the pipe directly — a named-pipe stream handed to .NET's own handler, pinned to Engine API v1.43, with no NuGet dependency.