This at least fails more nicely with the lxd snap:
https://pastebin.ubuntu.com/p/djwrN5nxjT/

I see the following denial in the journal:

Sep 25 18:17:24 kernel: audit: type=1400 audit(1569453444.560:27044):
apparmor="DENIED" operation="mount" info="failed flags match" error=-13
profile="lxd-holy-moray_</var/snap/lxd/common/lxd>"
name="/usr/lib/x86_64-linux-gnu/lxc/proc/" pid=30868 comm="lxd"
fstype="proc" srcname="proc" flags="rw, nosuid, nodev, noexec"

It's unclear to me if this use case of nesting lxd containers is meant
to be supported or not with lxd as a snap.

** Also affects: snapd
   Importance: Undecided
       Status: New

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https://bugs.launchpad.net/bugs/1777017

Title:
  snap install lxd doesn't work within a container

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