You're definitely referring to fully autonomous harnesses as I suspected - these are generally quite well suited to VM deployment (quite possibly in the cloud) if you're concerned with sandboxing as they don't typically run into the same challenges as an interactive LLM UI.

For ad hoc task/investigation-oriented fully interactive agent UIs the requirements are more complex & there's all a lot of advantages to running locally on host, but e.g. for builds & testing in that context there's less of a requirement for the LLM to have full control over every execution given user presence. Basically the use-case being discussed here is LLMs-as-assistance/pair programmers/active digital colleagues, rather than fully automated autonomous harnesses (legit but separate use-case).