The whole idea was pretty much either use custom kernel (which inevitably have way less info on how to debug anything in it), and re-do all of the network and storage plumbing containers already do via the OS they are running one.
OR just very slim linux one which at least people know how to use but STILL is more complexity than "just a blob with some namespaces in it" and STILL requires a bunch of config and data juggling between hypervisor and VM just to share some host files to the guest.
Either way to get to the level of "just a slim layer of code between hypervisor and your code" you need to do a quite a lot of deep plumbing and when anything goes wrong debugging is harder. All to get some perceived security and no better performance than just... running the binary in a container.
It did percolate into "slim containers" idea where the container is just statically compiled binary + few configs and while it does have same problems with debuggability, you can just attach sidecart to it
I guess next big hype will be "VM bUt YoU RuN WebAsSeMbLy In CuStOm KeRnEl"