From memory, I seem to recall that Genode takes this to its logical conclusion: every process is isolated with virtualization primitives.
As to why: isolating processes the old way needs jails to work properly, BSD lost the popularity contest, and Linux jails didn't get secure enough before VMs and containers took off.
The BSD jails / Solaris zones approach is not the same at the path taken by Linux. Linux gives you a facility to isolate network, a facility to isolate process views etc. You put them all together and you get a "container". The former starts off by having a container primitive that can't do much because, well, it's contained from everything. You then proceed to give it access to the network, the filesystem.
What do you mean? Isolating network and isolate processes view is what FreeBSD jail was always doing. The most common use of freebsd jails was providing VPS servers to users.
As to why: isolating processes the old way needs jails to work properly, BSD lost the popularity contest, and Linux jails didn't get secure enough before VMs and containers took off.