System does not fully support snapd: cannot mount squashfs image using when using Vagrant

ubuntu:18.04 image contains the fuse package. I don’t know what’s included in the Vagrant image you referred to but it seems to be lacking fuse as you noted.

FYI, https://app.vagrantup.com/emptybox/boxes/ubuntu-bionic-amd64-lxc says the image was last updated 3 years ago.