In other words: It embraces the Data collection and various security liabilities of these OSs by implying Windows and McOS are viable Operating system for anything other than being spied on.

You can swear on the Internet. The same way I can say that I want to spray pepper spray on your private parts. And you can then cry about me because I said the big bad stupid word, so I have to una1iv3 myself.

Does this function similar to a “Private Space” on newer Android or “Secure Folder” on Samsung?

No. Unlike those, you dont have to unlock the app nd use them, the sandbox is just a normal apk but it dosent allow gservices root access and blocks most telemetry, leaving only the necessary APIs

If you want a total user sandbox, you create another user and install gservices there.

Are there problems with OTP in this environment?

There are like 30 ways to send/generate an OTP.