The spectrum comes with multiple tradeoffs, and isn't a simple "bare metal is more secure" narrative. Because as you move into VMs, containers, and code sandboxes, you lose isolation which increases risks, but you also gain capabilities to limit the application which decreases risk. So I believe the most secure approach is layered with much multiple types of isolation working together.

For example, you may isolate a specific customer to bare metal so an escape doesn't compromise other customers. But within that bare metal, you may run containers because they make it easier to work with a read only root filesystem that's also trivial to upgrade. You can also add on user namespaces and seccomp in the container to minimize the risk of a container escape. And then the application may have its own sandbox that limits individual capabilities and which API calls it can run.

Every use case is different, and some layers may not be available depending on that use case. But rather than picking one point on the spectrum, one should pick a list of technologies that best solve each use case.