There's no easy way of switching between them, starting a new firefox instance requires running from a command interpreter with -P specified, even the selection window isn't great. The containers feature is the alternative you want to propose here.
- New tabs do not inherit current container
- No way to make Ctrl-T do this by customization (I investigated extensions (can't remap Ctrl-T) and even system-wide Ctrl-T remapping with Karibiner; neither gives you what you want)
- History is shared across containers. So e.g. work URLs mixed up with personal. That's contra to one of the main purposes of Profiles.
- External applications do not open a tab in the current container. So e.g. clicking in a link in work slack will fail because it will not open in a tab which has work cookies / google account etc.
Evidently Containers are not designed as a Profile replacement. I'm not sure what they are for but I don't think it's a need that I have.
As I understand it using the long-standing Firefox profiles feature is the way to go, but personally I switched back to Chrome after a month of the new Firefox Beta because of the convenience of Chrome profiles. I should try Firefox profiles, but I exhausted my experimentation energy on Containers.
Middle-clicking or Ctrl+clicking the New Tab button does inherit the current container. It also opens the new tab to the right of the current tab instead of at the far right of the tab strip. These actions are one in the same, so any extension that opens a tab to the right of the current tab (like Always Right or All Tabs Helper) also make the tab inherit the current container.
It's strange that such a useful feature is barely advertised at all in the UI, but it's there.
But your other criticisms of using containers as profiles are spot-on.
http://kb.mozillazine.org/Shortcut_to_a_specific_profile
Also don't forget to add -no-remote option to each of the links to enable starting such browsers in parallel. Sadly it's not mentioned behind the URL above.
Firefox needs to improve on Chrome here. The erstwhile "Profile Switcher" addon provided a nice UI but is sadly gone after the WebExtensions transition and I cannot find an equivalent so far.
But containers don't have separate extensions, bookmarks and history so they can't completely replace profiles.
So at least until then, about:profiles is no replacement for using the -P command-line switch to start the profile manager.
Using multiple profiles seamlessly is one area Firefox can and should seriously improve, or Chrome's "User" feature will always have the edge.