I am unaware that Pope Francis has used this phrase. However, it is a rather common expression today among priests and theologians. It describes the unfortunately common reality of many Catholics in the pews who have received all their Sacraments, and may even faithfully attend Mass each Sunday and go to confession at least once a year, but they have never really met Jesus Christ or encountered his presence powerfully. 
 
Sadly, many Catholics, often due to poor catechesis, reduce the sacraments to rituals, rather than to living and real encounters with the Lord Jesus, who himself is the true celebrant of every Sacrament. The purpose of all the Sacraments is to sanctify us, and in particular ways, to lead us deeper and deeper into a life changing and transformative relationship with Jesus Christ. They are to put us in living, conscious contact with Jesus, so that we see our lives being changed. 
 
But the all-too-common experience of many Catholics is that Sacraments are only vaguely appreciated in this way. Many see them as tedious rituals, rather than transformative realities. Too many seek the shortest Mass almost as if it were more like a flu shot, a kind of “necessary evil,” to be dispensed with as quickly and painlessly as possible. Confession too is avoided. 
 
Very few Catholics come to Mass expecting to be transformed. In a way, people put more faith in Tylenol than the Eucharist since, when they take Tylenol, they expect something to happen, they expect the pain to go away and healing to be induced. But too many Catholics do NOT expect anything like this from the Holy Communion with Jesus. 
 
This is what is meant to be sacramentalized, but unevangelized. It is to be faithful to the pew and to the Sacraments but to lack the evangelical zeal, joy and transformation one would expect from a more fruitful reception of the Sacraments. It is to go through the motions but not really get anywhere. It is to receive Jesus but not really experience him in any meaningful manner. 
 
Pastors, parents and Catechists need to work to overcome what amounts to a lack of deep faith in, and experience of, Jesus. Far from denigrating the Sacraments, the phrase seeks to underscore the truer and fuller reality of the Sacraments, which are not mere rituals, but powerful realities if received fruitfully.

In the ancient Church one usually entered the sanctuary through the baptistery and the custom of blessing oneself with the water naturally took up as a reminder of baptism. In later centuries as church buildings grew larger and doors multiplied, small fonts were placed near those doors and the tradition continued. 
 
The practice of placing sand in the fonts for Lent is a tired aberration and not prescribed by any norms. At no point in the liturgical year is it appropriate to cease remembering our baptism.

While a brief column such as this cannot possibly plumb the depths of the questions you raise, a few observations should be made. 
 
First, it does not pertain to God to annihilate any rational creature he has made. Thus, angels and men have an immortality that pertains to their souls; and for humans, one day, to our bodies as well. Having given the gift of life, God never withdraws his gift. While it is true that demons, and the human souls in hell have definitively rejected his love, God does not thereby cancel the love he has extended to them. He continues to sustain the life even of his enemies, though they choose to live apart from him and what he values. 
 
Secondly, your question tends to put God within serial time, where time passes incrementally from future to present to past. And, thus, the question occurs to us, "Why would God at some time in the past, knowing what a person would do in the future, bring them into existence today?” But God does not live in or relate to time in this manner. For God, past, present and future are all equally present. And thus, while God's inner life is mysterious, it is clear to us that God does not deliberate in the manner we do. Time does not unfold for God like it does for us. So, to some degree, even the way we phrase our questions is invalid. God does not ponder “A”, look forward to “B”, and then do “C”. 
 
But let us for a moment assume God did act temporally in this way, and that at some point in the past, God, knowing that a person would do horrible things in the future, considers their existence today. Let us say, that seeing the bad things they would do, he simply vetoes their existence. 
 
But what does this do then to human freedom? In effect, it cancels it. Why? Because if in knowing that a person will choose badly, God preemptively vetoes their existence, then the whole process of choosing God and his kingdom values is “front‐loaded” and none of us who do exist are really free. Freedom would only be theoretical since no existing person actually can or ever did say “no.” If we are not free to say no, we are not really free to say yes to God and love Him. 
 
Many more things related to the questions you raise could be said. But for now, let it be enough for us to say that the answers are caught up in the mysteries of God's love, time, and human freedom.