The JVM did that many years ago and nobody liked it. I can't help but think wasm is just the same idea but worse.
One could always launch any java process with java -Djava.security.manager -Djava.security.policy=someURL and it would sandbox a huge number of things (see: https://docs.oracle.com/en/java/javase/17/security/permissio... )
The problem is that defining a reasonable policy for any modern app is a gargantuan pain -- as is the case with any security policy language -- so as the GP said people hated it and now it's dead https://openjdk.org/jeps/411
You basically can't take a complex thing and write complex security rules for it and expect success & real world adoption.