I can't make it work even after manually installing squashfuse
(FYI lxc created by juju deploy cs:ubuntu --to lxc:1 )

root@juju-machine-1-lxc-14:~# uname -a
Linux juju-machine-1-lxc-14 4.8.0-34-generic #36~16.04.1-Ubuntu SMP Wed Dec 21 
18:55:08 UTC 2016 x86_64 x86_64 x86_64 GNU/Linux

root@juju-machine-1-lxc-14:~# apt-cache policy squashfuse
squashfuse:
  Installed: 0.1.100-0ubuntu1~ubuntu16.04.1
  Candidate: 0.1.100-0ubuntu1~ubuntu16.04.1
  Version table:
 *** 0.1.100-0ubuntu1~ubuntu16.04.1 500
        500 http://archive.ubuntu.com/ubuntu xenial-updates/universe amd64 
Packages
        100 /var/lib/dpkg/status

root@juju-machine-1-lxc-14:~# snap install hello-world
- Mount snap "core" (888) ([start snap-core-888.mount] failed with exit status 
1: Job for snap-core-888.mount failed. See "systemctl status 
snap-core-888.mount" and "journalctl -xe" for details.

root@juju-machine-1-lxc-14:~# journalctl -xe
Feb 08 22:54:21 juju-machine-1-lxc-14 systemd[1]: Failed to reset devices.list 
on /system.slice/snap-core-888.mount: Operation not permitted
Feb 08 22:54:21 juju-machine-1-lxc-14 systemd[1]: Mounting Mount unit for 
core...
-- Subject: Unit snap-core-888.mount has begun start-up
-- Defined-By: systemd
-- Support: http://lists.freedesktop.org/mailman/listinfo/systemd-devel
-- 
-- Unit snap-core-888.mount has begun starting up.
Feb 08 22:54:21 juju-machine-1-lxc-14 systemd[1]: Failed to reset devices.list 
on /init.scope: Operation not permitted
Feb 08 22:54:21 juju-machine-1-lxc-14 systemd[1]: Failed to reset devices.list 
on /user.slice: Operation not permitted
Feb 08 22:54:21 juju-machine-1-lxc-14 systemd[1]: Failed to reset devices.list 
on /system.slice/dbus.service: Operation not permitted
Feb 08 22:54:21 juju-machine-1-lxc-14 systemd[1]: Failed to reset devices.list 
on /system.slice/ondemand.service: Operation not permitted
Feb 08 22:54:21 juju-machine-1-lxc-14 systemd[1]: Failed to reset devices.list 
on /system.slice/sys-kernel-debug.mount: Operation not permitted
[...]

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You received this bug notification because you are a member of Ubuntu
Touch seeded packages, which is subscribed to systemd in Ubuntu.
https://bugs.launchpad.net/bugs/1582394

Title:
  [16.04, lxc] Failed to reset devices.list on ...

Status in systemd package in Ubuntu:
  Confirmed

Bug description:
  This seems to be identical to Bug #1413193 which affected 15.04 and
  was marked Fix Released.

  On a 16.04 host with a 16.04 container:

  $ lxc-create -t download -n vpn01 -- -d ubuntu -r xenial -a amd64
  $ lxc-start -n vpn02 -d

  the container syslog shows repeated instances of "Failed to reset
  devices.list on ..." and continues generating such messages:

  $ grep devices.list .local/share/lxc/vpn01/rootfs/var/log/syslog

  May 16 14:37:20 vpn01 systemd[1]: Failed to reset devices.list on 
/system.slice/systemd-remount-fs.service: Operation not permitted
  May 16 14:37:20 vpn01 systemd[1]: Failed to reset devices.list on 
/system.slice/systemd-random-seed.service: Operation not permitted
  May 16 14:37:23 vpn01 systemd[1]: Failed to reset devices.list on 
/system.slice/rc-local.service: Operation not permitted
  May 16 14:37:23 vpn01 systemd[1]: Failed to reset devices.list on 
/system.slice/resolvconf.service: Operation not permitted
  May 16 14:37:23 vpn01 systemd[1]: Failed to reset devices.list on 
/system.slice/getty-static.service: Operation not permitted
  May 16 14:37:23 vpn01 systemd[1]: Failed to reset devices.list on 
/system.slice/systemd-user-sessions.service: Operation not permitted
  May 16 14:37:23 vpn01 systemd[1]: Failed to reset devices.list on 
/system.slice/console-getty.service: Operation not permitted
  May 16 14:37:23 vpn01 systemd[1]: Failed to reset devices.list on 
/system.slice/systemd-update-utmp-runlevel.service: Operation not permitted
  May 16 14:37:23 vpn01 systemd[1]: Failed to reset devices.list on 
/system.slice/rc-local.service: Operation not permitted
  May 16 14:52:51 vpn01 systemd[1]: Failed to reset devices.list on 
/system.slice/systemd-tmpfiles-clean.service: Operation not permitted
  May 16 14:52:51 vpn01 systemd[1]: Failed to reset devices.list on 
/system.slice/ondemand.service: Operation not permitted
  May 16 15:29:30 vpn01 systemd[1]: Failed to reset devices.list on 
/system.slice/console-getty.service: Operation not permitted
  May 16 15:31:11 vpn01 systemd[1]: Failed to reset devices.list on 
/system.slice/console-getty.service: Operation not permitted

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