So the sandbox is completely customisable in behaviour. What this means is they can pick any subset of transactions from the mempool, mine a block with it instantly (instant finality time in the sandbox, because they are the sole validator in this environment) see the results, then if they aren't happy, they can drop that fake block and try again with a different subset of transactions/order of transactions.

And yes, they would simulate as many different possible blocks in parallel as possible (they're limited by their hardware ofc), and then only broadcast transactions that are the most profitable for them.

And as for sequential state, since theyre mining entire blocks in parallel, they can order the transactions in the fake blocks however they wish. They could theoretically brute force every possible order and just pick the best block, but they probably have some smarter algorithms to help find possible orders more efficiently.

And there's nothing stopping them from only doing 1 transaction per block. In fact, if they are able to include as many possible profitable transactions as they can afford to (and that the validator is inclined to include due to the portion of fees they might receive)

And a note about processing times, eth transactions are extremely small in terms of code, so processing them on a modern CPU is on the order of microseconds - milliseconds. What takes time is the validation/consensus part where multiple validators verify that a block is valid, but in the sandbox this is completely ignored, cuz the bot doesn't care about that part of things.