Why wouldn't you just run your stable work on a vm? Drop it onto an unstable host to play around and of it breaks your work environment is backed up, stable, and unimpeded. There are many creative ways to work and dogfood.
In general, a VM for my work doesn't change anything. It doesn't magically keep anything backed up: I still need to commit/push regularly, and so on. If the host explodes, I'm still down, even if what I'm doing is in a VM. I could immediately reinstall an older release and get set back up, but that isn't really dogfooding for an OS. I would need to report a bug and actually get the issue resolved, which generally means running in a broken state for a while to get there.
Beyond that, I've used a VM for my day-to-day work in the past, and honestly I found it maddening. I couldn't fully utilize my computer without starving the host of resources, and there were a thousand other papercuts relating to hardware access and general instability. I try to avoid that development story these days.
As you can see, my concerns here have nothing to do with losing code or data. They relate to lost productivity and not satisfying my primary duties.
But no, I've actually never seen this. Probably better to lose people who leave over their employer messing up the work hardware than spending 3k per 2-3 years for a second machine.
Not all software is easily dogfoodable.
A funny incident:
There's a git forge called https://ayllu-forge.org/ that they use to develop itself.
`git clone` had broken, and it hadn't been fixed because the developers had already cloned the code.
For complex software, real-life testing all the corners is impossible.
You'd get some value out of people running it on VMs, some people running it on the same old hardware, some people running it on cutting-edge hardware, some people running it for extended periods and doing dist-upgrades, some people constantly reinstalling it (even within a VM).
There are so many places software could fail. Especially things that aren't repeated often seem to fail: For example, websites where logging in works, but creating a user fails and nobody notices, because all employees already have accounts.