Sometimes I forgot that sand box and open world are different, they tend to overlap, but you're right.
New Genesis is...
technically open world... but it still has boundaries. I suppose that is the difference between open-world and sandbox, all comes down to how boxed in you feel.
For example, Zelda: Breath of the Wild is an open-world Sega game given the scale of Hyrule. But once you activate all the towers and get around the place you'll start to feel a little boxed in. But regardless I still regard BotW an open-world game given there is many towns and other locations to visit.
New Genesis however feels more like a sandbox than open-world. There is only two settlements, the village you start off in which I can't remember the name of and Central City. The village felt more like a naturally populated place in comparison to the city... well it did before it was destroyed making Central City the only settlement in the entire region.
And really, it isn't really a city. It's more of a millitary base with on-site shops and services. I've seen cities in the original PSO2 that were much bigger and (while limited to UQ) got to explore them to a degree. Central City is just a few buildings surrounded by a main building. and doesn't offer much to explore.
From Central City it doesn't take long to reach the edge of the region of any direciton on foot which is why I feel like PSO2:NG is more of a sandbox game than open-world. There are places to explore, some more hidden than others, but there's not much to do other than missions.
And I bet the new desert region will be just the same. Mostly canyons, desert and in the center of it a hub-base posing as a city.
