Apple could probably come up with some spiffy branding. “Run this on an islandTM” or something like that. Call the feature “Archipelago.”
A similar feature ships on HP business PCs as HP SureClick based on uXen, derived from Bromium micro VMs, derived from Xen, which is used by Qubes. Also cloned by Microsoft in Windows as Application Defender Guard. Bromium isolated each tab of a web browser in a separate Windows VM with copy-on-write memory, and even individual network connections could be isolated in a micro-VM.
A similar architecture has evolved on mobile phones as Android Virtualization Framework (AVF) with pKVM nested virt. Apple has taken baby steps in this direction, adding hardware nested virt on M2+ silicon, M3+ macOS and M4+ iPad Pro "Secure eXclave" micro-VM for camera LED indicator.
While the underlying infrastructure is slowly being built to enable disposable VMs and other security improvements based on micro-VMs, one challenge is high-performance graphics composition of display output from the VM with the main desktop. Google has blazed an OSS trail with virtio and CrosVM on ChromeOS, which will hopefully be ported to Android with external display output. Since Apple controls both hardware and OS, they could add GPU hardware support for virtualization, removing any perceptible UX slowdown from micro VMs. Intel already added SR-IOV virtualization to Xe iGPUs.