Comment by fwystup

I'm currently building a Docker dev environment for VSCode (github.com/dg1001/xaresaicoder) usable in a browser and hit the same issue. Without docker-in-docker it works well - I even was able to add transparent proxy in the Docker network to restrict outbound traffic and log all LLM calls (pretty nice in order to document your project). For docker-in-docker development and better security isolation, I'm considering Kata Containers instead of Vagrant. Which gives me real VM-level isolation with minimum perf overhead, while still be able to use my docker stuff. Still on my TODO list though. Has anyone actually run Kata with vs code server? Curious about real-world quirks - I've read that storage snapshot performance can be rough.