I am a bit confused. You said you were going to use Proxmox. It is a hypervisor built on top of Debian. Good choice btw. Why do you need another hosting OS? Proxmox runs the VMs and LXCs and is naturally your hosting OS.
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I am looking at proxmox to create the VMs, of which I am considering dietpi.
Note, I am addicted to docker, and whilst I would love to run a bunch of containers within LXC, from my research, it is problematic and unfortunately I don't have time at the moment to learn the intricacies of LXC <> docker.
I like the idea of LXC minimal OS.
Oh okay I get what you mean now.
If your Proxmox machine is not stingent in resources (e.g. storage, memory, etc), I would recommend sticking to distros you find more familiar with. Popular distros such as Debian, Ubuntu, and Arch are also fine. I don't think the overhead is that pronounced.
I have been running docker in LXC (Ubuntu server 22.04 image for the LXC + Official Docker installation, i.e. not Snap) and so far I have not encountered any roadblock from the intricacies between LXC and Docker. Usually they are from within the docker images and the embedded networks. But I am not centralizing all Docker affairs into one LXC. I split them by services. So your mileage may vary.
The best OS to host on will someday be NixOS, bar none IMO. However, that BEST title will depend heavily on someone sharing a config that leverages the power of NixOS to make it as foolproof and rock-solid as other projects that leverage Nix’s power and reliability.
I’d host an instance if we could would move from the world of Docker being the only game in town toward a more reproducible standard config that uses Nix.