You can play two players. I am pretty sure you only need one account, and the second player can log in as a guest on that account. Making a second account is probably worthwhile if the wife ever wants to save progress in any game. I think you are limited to one Xbox Live account per Microsoft account, and one Microsoft account per email.
As for why it's getting more complicated? Game systems are now social platforms, and also the accounts are needed to sell you shit digitally.