The distro of your choice from the small pool that you are given to choose from.

It's not a completely unrestricted choice.

That pool includes Ubuntu, Debian, SUSE, Fedora and a few others if I remember correctly, although it may have expanded since.

I'm not sure how straightforward rolling your own is.

You have no idea what you are talking about. You can install any kind of distribution by copying over their rootfs. For example, I am running Void Linux on WSL2.

The pool in question is open - anybody (not just Microsoft) can package and publish a distro there.

And for one-off use, there's wsl --import: https://docs.microsoft.com/en-us/windows/wsl/use-custom-dist...

And building a custom one is easy. I have Gentoo running in WSL with no fuss.

Can it run Linux From Scratch (LFS)? It seems like it could.

Yes sure it can, create a usable (chrootable) Linux From Scratch rootfs tarball and import it using wsl --import, and everything should be fine. Though don't forget to remove the kernels because WSL don't load them, instead WSL uses a custom kernel shipped with the Windows system.