> Sanskrit was widely spoken and understood just like Latin or Avestan, in its heyday. Otherwise it wouldn’t be part of the liturgical traditions of Buddhism, Jainism and Nastika traditions.

I think, and it is just my speculation, that for most of Indian History, Sanskrit was the link language.

Just like "Latin" in the USA and Europe of the early 17th and 18th centuries, when all academic instructions were carried out in Latin!

So, nobody used Sanskrit as the primary language, but everyone could or knew someone who could convert Sanskrit to the local dialect.

It is almost like how Chinese and Colombian traders might sign a contract for coffee purchase in English. Neither might use English in most of their daily operations.