I think these are are excellent points, but the complaint talks about significant performance and power issues.
That's every virtual machine that's ever existed. They are slower than metal and you're running two OS stacks so you'll draw more power.
Hot forking would be a killer app here - far faster to clone a VM, screw it up, burn it down, and repeat than anything else
Not every virtual machine, try microVMs.
I am building one now that works locally. But back in the day, I saw how extremely efficient VMs can be at AWS. microVMs power lambda btw