Yes ZFS has this rather peculiar behaviour where as it starts to run out of space, rather than reporting a disk full error and ending the command LXD is calling (in this case most likely zfs recv or rsync) instead as it approaches its maximum utilisation the write operations slow to a crawl and eventually effectively block.
This means that LXD won’t know if the disk space has been filled or whether its just slow I/O.
See
I think the request about checking target disk space has come up before, but it is non-trivial to do so, especially on ZFS, due to the relationship between the parent snapshots and the difference in copy modes based on whether the source pool is ZFS or not.