TestFlight users don’t require a sandbox account, but they will test against an automatically created sandbox account.
Sandbox Accounts
The moment a tester opens your application, a sandbox
account is created for them. This means it’s no longer necessary to
create test accounts in iTunes Connect. Testing In-App Purchases was
never easier.
Source
Note that your TestFlight user is a legitimate App Store user. That user will be purchasing, restoring, etc. from the IAP in the Sandbox as opposed to the real IAP.
On iTunes Connect, the IAP can be “Approved” or “Ready to Submit” (or any other status, I think).