But does "it won't work" mean "don't try this in your app" or does it mean that the system can be expected to safely run arbitrary untrusted code?

The documentation makes it sound like it's primarily intended to guide people towards using the API correctly. Here is the whole section for context:

Redis places the engine that executes user scripts inside a sandbox. The sandbox attempts to prevent accidental misuse and reduce potential threats from the server's environment.

Scripts should never try to access the Redis server's underlying host systems, such as the file system, network, or attempt to perform any other system call other than those supported by the API.

Scripts should operate solely on data stored in Redis and data provided as arguments to their execution.