I know it's one me for thinking this -- since the domain is fly.io -- but I was really hoping this is some local solution. Not self-hosted, but just local. A thin command line wrapper to something (docker? bubblewrap?) that gave me sort of a containerized "VM" experience for my local machine using CoW.
Check out LXC and the wider Incus set of projects: https://linuxcontainers.org/incus/.
Running IncusOS on some local hardware with ZFS underneath is a phenomenally powerful sandbox.