Windows CE isn't only for H/PCs and Palm PCs. It runs on a wide range of 32 bit processors, and can be made to work with pretty much whatever hardware you throw at it. The sort of devices that run Windows CE today include:

In-car navigation systems
Mobile phones
Industrial machines
Set-top boxes
Games machines

The actual Windows CE implementation of Win32 may only be a subset of it's Windows NT equivalent, it's still easier for a given company to find Win32 programmers for their devices than it is for them to find, say, Linux application developers.

And to address nutate's comments:

1. How can a Linux user possibly judge the quality of a whole new operating system based purely on it's user interface on the one product that you used? Isn't that like me installing Linux with some crappy window manager and claiming that Linux must be crap because it looks horrible?

2. You state that the full Windows applications are bloatware and yet the pocket versions are too small? You're arguing for both sides of the same argument!