But yeah, I guess in enterprise environments Kubernetes has probably already superseded Docker in many cases, or rather, Docker was never really much of a thing there to begin with. That said, I doubt many enterprises are running Kubernetes inside LXCs.
It not only supersedes docker but also the hypervisor. You don't necessarily need a hypervisor if you have a way to deploy Kubernetes clusters baremetal. A hypervisor might still make sense if you want to distribute resources between different tenants or teams (like have one cluster for your developers and another one for production etc). And yes, nobody runs Kubernetes inside lxcs in enterprise because it would only add another layers complexity without any benefit. In other words: Kubernetes in lxcs is pointless.
By the way, Proxmox is kind of developing its own Docker alternative these days: https://pve.proxmox.com/wiki/Roadmap#Virtualization_&_Guest_Management
Yes and I really would wish they wouldn't waste resources on this endeavour, to quote the roadmap
Mature OCI image support and provide declarative multi-guest application support based on the Compose Specification, allowing groups of LXC application containers (and, longer-term, VMs) to be defined, deployed, and lifecycle-managed as a single application unit directly from Proxmox VE.
https://pve.proxmox.com/wiki/Roadmap#Virtualization_&_Guest_Management
I might be wrong but for me this sounds like extending the existing tech-preview feature of converting oci images to lxcs. Despite usage in resource-constrained homelabs I don't see any point in this. The biggest advantage of oci images in podman/docker/kubernetes is their immutability. Meaning if something bad (Tm) happens you just shut down the container, restart it and it will be in the same state as the image. This benefit gets lost, if they are converted to lxcs. While I can see a (although limited) usecase in homelabs are there actually any serious IT environments where admins like to run oci containers in a way which is neither intended not supported by the original creaters of said oci image ? For me this sounds like a potential neverending source of frustations of debugging why some config error in a oci-converted-to-lxc stays and the upstream can't help with it.
Now deploying Vms as InfrastructureASCode is indeed useful but wouldn't it make more sense to have an official terraform/opentofu provider?