I believe Red[0] is closest along to practically realizing this concept by focusing on compositions of small languages, a premise Alan Kay also worked on with the STEPS project at VPRI[1].
The main thing that stops people from beelining down this path is the sheer quantity of yak-shaving involved. We're all impatient and have near-term goals, and glue-and-iterate gets us there without having to engage in a non-linear deconstruction and analysis of what's going on.
Trying to find a short REAL Red example (not Hello World or here's how to show an alert), and I can't seem to find one. Can you help me out? Something that would help me understand what the language is like.
The concept of Red is heavily based off of Carl Sassenrath's Rebol, only Red is both very high level and fully capable of low level programming as well. Rebol can show you the high level things possible with Red. It truly is amazing. Even though its kind of old now, I installed Rebol recently and was blown away by how much power I got with no installation. Red will be much the same and allow you to make miniscule native binaries.
Check out the REBOL examples on Rosetta code. I'm very fond of the "percent of image difference" one -- it's not large, but shows off some of the nice features like image handling and the fantastic REBOL GUI dialect. (Yes, I wrote it...)
The main thing that stops people from beelining down this path is the sheer quantity of yak-shaving involved. We're all impatient and have near-term goals, and glue-and-iterate gets us there without having to engage in a non-linear deconstruction and analysis of what's going on.
[0] http://www.red-lang.org/ [1] http://www.vpri.org/html/writings.php