Self hosting can be doable for constant small/medium size workloads
You can handroll a lot with: https://github.com/nestybox/sysbox?tab=readme-ov-file https://gvisor.dev https://github.com/containers/bubblewrap?tab=readme-ov-file
For hardware virtualized machines it much harder but you can do it via: https://github.com/firecracker-microvm/firecracker/ https://github.com/cloud-hypervisor/cloud-hypervisor
Freestyle/other providers will likely provide better debugging experience but thats something you can probably get past for a lot of workloads.
The time when you/anyone should think about Freestyle/anyone is when the load spikes/the need to create hundreds of VMs in short spikes shows up, or when you're looking for some of the more complex feature sets any given provider has built out (forks, GPUs, network boundaries, etc).
I also highly recommend self hosting anything you do outside of your normal VPC. Sandboxes are the biggest possible attack surface and it is a feature of us that we're not in your cloud; If we mess up security your app is still fine.
This is what I do (my project) for self hosting on a VPS/server:
https://GitHub.com/jgbrwn/vibebin
Also I'm a huge proponent of exe.dev
Obviously your service/approach is different than exe, more like sprites but like you said more targeted/opinionated to AI coding/sandboxing tasks it looks like. Interesting space for sure!