Is this a "why not" project, or are there real-world use cases for this?
You won't get persistence when you restart the process, but you'll still be able to run code that needs to read and write files.
Try it for yourself: visit https://ktock.github.io/container2wasm-demo/amd64-debian-was... to start a shell against a Debian container, then use "echo 'hi' > hello.txt" to write a file and "cat hello.txt" to read it.
Since it's Linux and you can give it "network access" (using workarounds such as redirecting via a server), you can just use one of the existing ways to mount a remote filesystem that could be stored on the server (such as NFS, sshfs, ...).
Or bridge/mount to the local browser and store it in indexeddb or whatever.
It already has directory mapping when running outside a browser - maybe there's even an easy way to do this more directly than funneling everything through the virtual network.
WASM is more or more being used to extend applications with custom functions/plugins, as well as function-as-a-service services. But they usually require writing custom code, specifically for these environments.
The ability to build standard containers, use any languages and tools, run shell scripts, etc. makes WebAssembly far more accessible. Complex applications can be tested natively, and deployed effortlessly later to environments that require WebAssembly.
From a performance perspective, this is not optimal. But from a productivity perspective, this is awesome, and definitely something to have in your toolbox when all you need is get things done.