Android is in fact the dominant platform by number of users, and has cool stuff like cloud gaming apps that iOS does not. There are also other aspects of the iPhone that many people prefer over Android phones, e.g. hardware features and quality.
The point about sandboxing is relevant because many people conflate sandboxing protections with the protections offered by App Review, and thus are afraid that non-App Store apps will be able to install viruses or brick their devices - which isn't the case.
Lastly, the automated malware screening that’s part of the App Review process can be offered separately, thus the risk of "catching malware” from non-App Store apps will be the same as with App Store apps.