I've used VMs because dealing with tool access is infinitely simpler & less fraught than tailoring sandbox profiles, but ultimately using sandbox-exec has yielded better workflows (if & when I've gotten an appropriate profile stood up). The sandbox tends to have a lot more rough edges than the VM, so I do switch back & forth between VM & sandbox, but I suspect a good sandbox-wrapping implementation with nice ux is the future.

Perhaps one could go further & combine them: e.g. a sanbox-wrapped on-host CLI that subshells/subagents out to VMs on demand. Seems potentially overcomplicated but I guess one can dream.