The UI/UX for container tabs will be a difficult design challenge. How do you explain to typical users what a contextual identity is and why/when they might want to use one?

I think per-window contextual identities, instead of per-tab, might be a good mental model. It's easy to explain to users that tabs in different windows can't see the same cookies. This is a generalization of Private Browsing window's throwaway context identities today. It's harder to explain that some tabs in the window are in the "Shopping" container and others in the "Personal" container.