How does Power BI dataset work in sharing access ?

We have a single PBI file that has all the metrics for our operation, stored in workspace A.

When we're creating a new report using that PBI dataset and published to workspace B, we shared the report to a person C who is not in either workspace A or workspace B, and we got below error message from person C's screenshot.

So we're wondering how does this Power BI dataset work in the PBI Service with sharing access? 
And how do we solve this issue? We really want to use the PBI dataset as our main sources when building the reports, as it's better for data & report management.

Thank you for your help!

PS: there's no RLS security set up in the dataset, and we're all holding Pro account.