I also prefer giving it a VPS over a Docker container.

On my own machine I just give it a Linux User Namespace, i.e. soft virtualisation via "bubblewrap."

What Docker Compose and Linux User Namespaces provide that a VPS doesn't: You can easily mount extra directories from your developer host machine in read or read+write mode. With the VPS you (most likely) need it to clone all of your resources separately, which requires SSH keys, and now you're slowly building towards an independent agentic environment, which is definitely very nice, but time-consuming, compared to piggybacking on your developer environment. Definitely the direction I'm going.