Yeah it can definitely be confusing! I always think of sandbox as "make me a folder I can edit if I need" (using sudo). Here is a quick listing:
-- writable: build an ext3 (filesystem) image that can support writable with sudo [single file]
-- sandbox: build into a folder that can also support writable with sudo, and it is "click around-able" as you would with these folder things :) [folder]
and then of course without any flags you get a squashfs filesystem [single file], which is read only, regardless of how hard you try, or with --writable flags. You could of course export it into something else to get that functionality, but then it wouldn't be squashfs anymore.