They didn't have the bloat back then that we have these days, like the crazy deep call stacks you see in both object-oriented and functional programming.
CICS programs were frequently written in assembler, sometimes COBOL and PL/I. Mainframe compilers from the early 1970s were much more advanced in many ways than the Unix/C technology described in the Dragon Book.
The mainframe did I/O through channel processors which were quite expensive in themselves, but offloaded a lot of work.
CICS did many things that operating systems do in user space. IBM never did produce a "ring to rule them all" operating system for the 360 series, but with the 370 some academics figured out how to run multiple operating systems in virtual machines. So CICS could run in a VM with the minimal OS that it needed.
Mainframe systems had the source code for CICS and the OS and usually used a custom build, so the kernel didn't have anything it didn't need.
The machine was expensive but cost effective if you used it efficiently, so people did.
