That’s exactly how I use LXD on Ubuntu. CoW with zfs or btrfs makes running sites on dedicated servers quite easy, and allows to experiment with upgrades, or other random stuff.
LXD is great. I've had it for a while in OpenWRT, but never on a CoW filesystem. Does LXD also utilize snapshots like jails do on ZFS to save some disk space?
I have now only pihole running on LXD and it's ok.