Can you point to evidence that Apple is rejecting anything from being notarized? I haven't seen any.

And sandboxing is completely orthogonal to the fine-grained revocation that notarization allows for. A sandboxed app could still be malicious: say, a weather app that asks for access to your Contacts ostensibly to show weather at your friends' location, but also uploads all the Contacts info to a malicious tracking service. With notarization, this app could have its notarization revoked once it's discovered.