The "attack vector" people try to protect themselves is "agent edited wrong file", not "LLM blew 0day on escaping sandboxing", containers are more than enough for what stupid stuff agents sometimes try, no need to go for a full-blown VM. Even UNIX permissions would be enough, but I think that's lost knowledge at this point.
Not if the host's version of .git is accessible inside the container via a bind mount.
Using the least amount of security features is a huge amateur mistake.
Best practice is to use 2 redundant layers of security, such that if one fails, there is still another one.
Using just the minimum amount of security technically possible is almost by definition hubris.
An example would be that you never point a gun at someone you don't want to shoot, regardless if there's bullets in the gun. If someone tells you, "you don't need to control where you point the gun, you just need to keep the gun unloaded and you can point it in jest to whoever you want, you can even pull the trigger technically", you know you have a reckless fool, regardless of whether they are technically right.
If your agent has access to the internet at any point it may read something that convinces it to try breaking out of its sandbox.