Doing everything in the cloud massively simplifies deployment and support.
Another complication is they claim the container isn't just "a docker container", but for increased security isolation (they don't want a repeat of VBA malware) it's a mini-VM focused to run on top of Hyper-V (the Windows Hypervisor) itself. That's a really complicated install process on the average machine (like installing WSL2) that sometimes involves flipping entire Windows Features on, so also something unlikely to be a smooth experience out of the box for Excel.
It might be neat if they made that an optional install and let users have offline support, but it sounded like they wanted to focus on online and collaborative UX first.
1 - That could be an optional component, behind a "Install Python for Excel " button.
2 - You need to install Python to code in Python anyway, with or without Excel.
3 - Bloat is the norm nowadays and I'm not sure whether users care. A clean Visual Studio install takes 10 GB of disk or something. Office itself takes several GB as well.
4 - Not sure why Docker would be needed. Using Python in Windows is fine nowadays. There are caveats with libs that are very reliant on POSIX (Airflow comes to mind,) but, again, if you control your distro you can limit the libs users can install.
Hyper-V is enabled by default on supported hardware.
