The isolates were not being run at the edge.
As far as I know, Cloudflare Workers have always executed within Cloudflare's network, not gone out to the internet and executed elsewhere (which I read as being in a hyperscaler cloud).
They were outsourcing to another company so there's plenty of room for overhead to creep in.
while microvm's are separate kernel + hardware virtualization through hypervisor guarantees
I wouldn't call it bad either, just different tools for different things