We have upstream 2 PR's which are open to add overlayfs support for docker on zfs
( Related issue - https://github.com/moby/moby/issues/41055 )
The author does not have the time to complete bits which means the PR's haven't been approved/merged yet. After discussing with William, we should see how we can assist the author so that we can have these changes in sooner which would enable us to use overlayfs on zfs. Why we want that is because right now docker creates lots of datasets for each image/container - likely 1 per layer if not more which results in slow zfs performance as the user can easily go to thousands of datasets if he/she is having a reasonable number of images/containers.