Removing @import 'sanitize.css'; from the <style> tag and adding import 'sanitize.css'; to the <script> tag resolves the issue.

I came to this solution when reading the "Where should I put my global styles?" section of the FAQ for vite-plugin-svelte

This pointed out three issues with my original +layout.svelte file:

1. Global styles should always be placed in their own stylesheet files whenever possible, and not in a Svelte component's tag

2. The stylesheet files can then be imported directly in JS and take advantage of Vite's own style processing.

3. The global attribute in my <style> tag is a feature from svelte-preprocess, which I was not using or had plans to use. If I were to use global styles in the <style> tag I should instead use the nested :global { ... } syntax, which not is recommended for global styles.

The fixed +layout.svelte looks like this:

<script lang="ts">
    import 'sanitize.css';
    let { children } = $props();
</script>

{@render children()}