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Don't we have favorable options to all of this (from Fox's perspective)? Up + B, Sheik still has to turn around to grab

None of these are reactable, even sheik running offstage isnt. Thats the whole point, you have decent options but they set the pace.

Youre also forgetting that fox vs sheik by the edge is an inherently risky situation, things that beat runoff bair risks u getting grabbed.

Is it better to just not engage and play center in most cases?

Depends on the character etc, the situation is not figured out by any means. More importantly its certainly not as simple as u first put it.

I think that's a better way to frame this. I think the better question I have is, if the Bair comes out and we're in a favorable spot. 1/2

Is there a better punish that can we can do with Fox? (similar to how people have discovered how to punish Falco 2x laser)

Double laser has never been hard to punish. This one is far more situational depending on both chars spacing and timing.