This bug was fixed in the package lxd - 2.12-0ubuntu2

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lxd (2.12-0ubuntu2) zesty; urgency=medium

  * Increate default inotify limits to 1024 instances per uid.
    (LP: #1602192)

 -- Stéphane Graber <[email protected]>  Mon, 03 Apr 2017 18:51:34
-0400

** Changed in: lxd (Ubuntu)
       Status: Confirmed => Fix Released

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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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