Sql-server – Data replication between SQL Server 2016 and SQL Server 2008 R2 is valid

Those aren't different versions just different service packs. Replicating between 2008 and 2008 R2 would better fit that definition of replication between two specific versions.

So The way I understand the MSDN article on the subject here is this

When you replicate between or among different versions of SQL Server, you are usually limited to the functionality of the earliest version used. For example, if you upgrade a Distributor to an instance of SQL Server 2008, but you have a Publisher that is running an instance of SQL Server 2005 and a Subscriber that is running an instance of SQL Server 2000, you are limited to the general functionality and replication functionality of SQL Server 2000.

And here is something more specific to merge replication

For merge replication, a Subscriber to a merge publication can be any version no later than the Publisher version. For more information about compatibility for earlier versions, see "Compatibility Level for Merge Publications"

In reality though, even if you can replicate between different versions, that can't be ideal. Replication is already complex enough by itself without adding in yet another layer of complexity.

So if you can apply those service packs to the other servers, you should in my opinion.

https://msdn.microsoft.com/en-GB/library/ms143506.aspx shows SQL 2016 Dev as supported on Win10 Home, and I don't know of any explicit feature limitations--though you are right in general that you're limited to what the OS supports.

Have you tried to set up replication using the built-in service logins? I believe the instructions around adding Windows logins are for security best practice, which may not be an issue for a dev environment.