does it like a waboku, stopping damage and stopping the monster from being destroyed or does it act like a kuriboh and stop just damage to life from battle??

It's like Kuriboh and Hallowed Life Barrier in that the damage dealt to the LP of the player are reduced to zero. The monsters are still vulnerable to destruction through battle.

The Sanctuary in the Sky
Field Magic
Battle Damage to the controller of a Fairy-Type monster from a battle involving that Fairy-Type monster becomes 0.

Waboku
Normal Trap
You take no Battle Damage this turn. Your monsters cannot be destroyed as a result of battle this turn.

Any overflow Battle Damage or Trample Damage is reduced to 0, but the monster can still die in battle. It's basically meant for powering up Mudora AND to be able to keep your LP higher than your opponent's so you can use The Agent of Judgment - Saturn or The Agent of Force - Mars.