The IDE shouldn't crash by itself (it is extremely rare for the IDE to crash, it used to be less stable at the past but that was around 2006-2007 or so).

However packages (which includes your own widgets) are nothing more than native libraries that become part of the IDE, so any bugs in a package will cause the entire IDE to crash. This is a double edged sword since on one hand you can get a less stable IDE from your own bugs, but on the other hand when you work with a component or widget in the visual editors, you are really working with a "live" instance of that widget that is then serialized as part of the form or data module instead of a mock stand-in object that some other GUI-only designers will give you. Also this allows you to use any TComponent-derived object through a visual editor, not only visual/GUI objects.

Thanks. I understand now. I somehow thought the IDE would use at least some sandboxing

I'm not sure if this is possible, AFAIK this is common in any development environment that allows you to work with live instances of your objects - i think even IDEs like Netbeans have the same issue with custom controls.

Was this with a newer versions of Lazarus? It has become far more stable now.