Cloud Init can do quite complex things if you configure it so.
For a Host/Server being installed on an actual IaaS “Cloud”, the cloud-init file may be limited in maximum “size”.
However, does that still apply to the LXD container use-case as the referenced comment [1] below suggests it may only apply to Host/Servers on an IaaS Cloud not containers.
I guess experimenting with a larger Cloud Init file would tell us if LXD has a problem with say a 32,000 byte (or larger) Cloud Init but I thought I’d ask first:
User data formats - cloud-init 23.4.1 documentation
Content found to be gzip compressed will be uncompressed. The uncompressed data will then be used as if it were not compressed. This is typically useful because user-data is limited to ~16384 [1] bytes.
[1] See your cloud provider for applicable user-data size limitations…