Doesn't this include limitations on what the software can do?
Not in several years, no. MSIX, since it was renamed that, supports nearly the full gamut of MSI (just specified in XML directly instead of an ancient, deprecated Microsoft JET database file format and modern ZIP instead of the ancient Windows CAB archive format), and classic-style Win32 apps can be installed with no more of a sandbox than is usual from a raw MSI install rather than an MSIX install.