Android for Work already lets you isolate some apps in their own little container with separate data, but this would let you keep it safer by never having that data even physically present on the phone.

Actually generalize that: Depending on your exact threat models, this is a great way to have data that can't be lost or stolen just because your device is.

For a large enough app it's probably less data intensive, not to mention much faster, to run the app in a cloud data center where it has effectively unlimited bandwidth, and just stream a video of it over a smaller network connection to the phone.

Creating virtual phones in cloud is probably an easy way to create a lot of them, which allows you to do things like run untrusted apps in complete isolation without access to any of your data or other applications.