I don't know that much about /proc/sys/fs/inotify/max_user_instances,
but apparently this isn't properly namespaced, so it is a global limit
for all containers on the host? As a workaround, lxd could ship a
/usr/lib/sysctl.d/ snippet to bump it, but I'm not sure if that has
other downsides (particularly as we install lxd by default).

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https://bugs.launchpad.net/bugs/1602192

Title:
  when starting many LXD containers, they start failing to boot with
  "Too many open files"

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