Earlier quoted context omitted.
I do not know since when (I am using it for couple of years), but in Arch, it is very simple to have two X sessions (by using "log out" > "switch user") for two different accounts, so switching it's just a Control-Alt-F7 away. Additionally, one can make the main user part of the group of the development user, so that you can read/write easy in the development user account and it is even easier to share stuff.
Multiple X sessions has been possible for decades. I think its possible with Wayland too. You can also start applications as another user so you do not even need multiple sessions. There are quite a lot of privilege escalation attacks so I am not sure this is sufficiently solid.
You are correct that it should not be seen as a perfect protection, but considering the effort to set it up I see it as worth it. By seeing in this thread how many people do not use anything similar (ex: containers, separate users, etc), I hope attackers will just be lazy and target those people first, why bother with a local privilege escalation when interesting data is just in the same account?