Unlike Linux, on Windows an allocation is a commitment. You will be able to write to the allocated memory. Performance may be horrible, but Windows does not need an OOM killer.
If there's no paging file, a commitment must be backed by RAM. And yet unused memory (such as that used by only during program initialization) is still using up RAM as it can't be paged out. So there's less RAM to make the commitment but a much greater need.
The LFH breaks buggy programs, or better stated: buggy programs may show their bugs in the presence of LFH. Microsoft is extremely friendly towards broken programs, and making LFH opt-in for XP is a typical example of their accommodating behavior.