Prior to version 6, the run-time engine was part of every built application. That meant that every executable was several MB in size. Now, with a separate run-time engine, it only needs to be installed once. This is a distinct advantage when there are multiple LabVIEW applications that get installed. The "1 MB" exe is kind of misleading but it's not all that different from other windows applications that might also have a small exe but then require several MB in .dlls to run.