So for the new version of Flight Simulator, they divided it into core game engine and "content packages" that fill the rest (airplanes, landscape, missions, other assets). Packages get loaded into a virtual file tree[2]. Packages may contain custom code, usually compiled from C++ to WASM, but the code is executed in isolated containers and it does not have access to the underlying file system. It only sees contents of its local package within the virtual file system.
As a result, the shiny airplane you bought from some online marketplace can't read your documents folder and send its contents to remote servers anymore. It remains an issue with many other games where third-party modifications ship as unrestricted DLLs, even on authoritative-looking platforms like Steam Workshop. For example, a pathfinding fix for Command & Conquer on Steam is just a DLL swap[3] - this should make security-concious people very uneasy.
[1] https://docs.flightsimulator.com/html/Programming_Tools/WASM...
[2] https://docs.flightsimulator.com/html/Developer_Mode/Menus/T...
[3] https://steamcommunity.com/sharedfiles/filedetails/?id=21371...