Entity Reference Field: How to filter a View entity reference
Yes, the options you can select from there are plugins.

As you found out, you can't use views with config entities, but you can implement one yourself.

There are two ways to do that, one is to define your own plugin that you can select there, like ViewsSelection does it. Or, it is possible to provide a version of the default plugin (DefaultSelection) that is automatically used for a specific entity type, see for example TermSelection.

I would however only use the second pattern if it is your own entity type, and otherwise define a separate plugin (you can still extend from DefaultSelection and re-use the code there).