Operating system's way of working is stifling small, gradual assimilation (7)
I believe the answer is:
osmosis
'gradual assimilation' is the definition.
(I've seen this before)
'operating system's way of working is stifling small' is the wordplay.
'operating system's' becomes 'os' ('OS' can be a synonym of 'operating system').
'way of working' becomes 'mo' (modus operandi).
'stifling' means one lot of letters goes inside another (some letters get stifled or contained).
'small' becomes 's' (abbreviation - e.g. clothes size).
'mo'+'is'='mois'
'mois' going around 's' is 'mosis'.
'os'+'mosis'='OSMOSIS'
(Other definitions for osmosis that I've seen before include "absorbing process" , "Becoming absorbed" , "Diffusions of liquids" , "picking up slowly" , "Large shopping area" .)