Are there any benefits of running Proxmox and virtualizing everything, vs having a host OS and running Docker and libvirt to host VMs for services that need it? I know that Proxmox does some storage management etc, but it seems like I could get everything it does with a well-managed host OS + ZFS/btrfs and using virtualization tools
Home Assistant is a good example - its recommended installation is a VM
It’s recommended bare metals not vm. Home assistants often require the latest feature, and some of those features may not work well behind any kind of virtualisation (especially docker’s network virtualisation). Running it on a VM is definitely better than running it in an out dated environment (like debian) but it’s not perfect.
Running Home Assistant OS in a virtual machine using the provided VM images is a supported configuration.
From ADR-0015: Installation Method: Home Assistant OS:
Supported != To recommend