I think the main reason for having the red widget close a window and not quit in some circumstances is because applications need to load. This is logical, most apps stay running when you close the window so you still have access to the program without starting it up again.
Microsoft Word lets you close the window, and CMD-N will start a new document without having to load the whole program again, and it uses less memory. It also serves great purpose to keep the app running when you are looking for files, or when you want to open another file, drag and drop it onto the running app's icon and up pops the document with no app load times.
This is why I hate Quicktime on the Windows PC. You are looking through lots of movies, and the first time you want to open one, QuickTime has to load, but then you don't want that movie, so you press the 'X' , and the whole of QuickTime closes, making you load it up again when you want to watch another movie, instead of having everything ready so that the new movie will just play.
You have to have one movie already open to avoid loading when you open a new movie. This is stupid and a memory hog.
Also, by default, QuickTime opens a new blank movie when launched, if you close this movie in Windows, then QT quits. There's no menu bar for applications in Windows, so you can't "Open movie" once the application's window is gone, this is very very annoying.
The logical law for the behavior of the red widget should
Apps with one window that do not have the CMD-N command, should quit when the red widget is pressed.
Apps that do let you create or open multiple windows should stay running after CMD-W.
Anyway, the dock itself, I have no grudges with. It works, and it works well. The new app switcher should have settings allowing those that don't like it to switch back to the old way. But I like the fact that you get to see the apps' icons at full size for once, and it's clear, and easy to click on the app you want. Looks and acts better than the Windows one at any rate..