This bug was fixed in the package linux - 4.8.0-19.21

---------------
linux (4.8.0-19.21) yakkety; urgency=low

  [ Tim Gardner ]

  * Release Tracking Bug
    - LP: #1629057

  * 4.8.0 kernels do not complete boot process on VM (LP: #1627198)
    - [Config] CONFIG_HARDENED_USERCOPY_PAGESPAN=n

  * mount-image-callback cannot mount partitioned disk image (LP: #1628336)
    - SAUCE: nbd: Only delay uevent until connected

  * Support snaps inside of lxd containers (LP: #1611078)
    - apparmor: add interface to be able to grab loaded policy
    - securityfs: update interface to allow inode_ops, and setup from vfs fns
    - apparmor: refactor aa_prepare_ns into prepare_ns and create_ns routines
    - apparmor: add __aa_find_ns fn
    - apparmor: add mkdir/rmdir interface to manage policy namespaces
    - apparmor: fix oops in pivot_root mediation
    - apparmor: fix warning that fn build_pivotroot discards const
    - apparmor: add interface to advertise status of current task stacking
    - apparmor: update policy permissions to consider ns being viewed/managed
    - apparmor: add per ns policy management interface
    - apparmor: bump domain stacking version to 1.2

  * linux-image-extra-4.8.0-17-generic does not provide many sound card modules
    (LP: #1628523)
    - [Config] CONFIG_ZONE_DMA=y for generic

  * Yakkety - disable ARCH_ZX (LP: #1628503)
    - [Config] armhf: disable ARCH_ZX

  * Enable switchdev config parameter for Yakkety (LP: #1628241)
    - [Config] CONFIG_NET_SWITCHDEV=y for amd64/arm64

  * Ubuntu 16.10 kernel v4.8: Installation failing on Habanero with Shiner card
    (LP: #1628009)
    - firmware: Update bnx2x to 7.13.1.0

  * vNIC driver missing in 4.8 kernel package (LP: #1628187)
    - [Config] Enable CONFIG_IBMVNIC=m

  * Yakkety - armhf: MFD_TPS65217 and REGULATOR_TPS65217 are boot essential
    (LP: #1628112)
    - [Config] armhf: MFD_TPS65217=y && REGULATOR_TPS65217=y

  * Miscellaneous Ubuntu changes
    - Rebase to v4.8-rc8
    - [Config] skip Ubuntu-4.8.0-18.20
    - [Config] missing modules in armhf/s390x

  * Miscellaneous Ubuntu changes
    - rebase to v4.8-rc8

 -- Leann Ogasawara <leann.ogasaw...@canonical.com>  Sun, 25 Sep 2016
12:13:35 -0700

** Changed in: linux (Ubuntu)
       Status: Fix Committed => Fix Released

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https://bugs.launchpad.net/bugs/1611078

Title:
  Support snaps inside of lxd containers

Status in Snappy:
  Fix Committed
Status in apparmor package in Ubuntu:
  Fix Released
Status in linux package in Ubuntu:
  Fix Released
Status in lxd package in Ubuntu:
  Fix Released

Bug description:
  I tried following the instructions on snapcraft.io and got a failure.
  See the output below.  I've also attached the relevant output from
  running "journalctl -xe".

  uname: Linux 3.19.0-65-generic x86_64
  release: Ubuntu 16.04
  package: snapd 2.11+0.16.04

  Notably, I'm running this in an LXD container (version: 2.0.0.rc9).

  ---------------------

  $ sudo snap install hello-world
  64.75 MB / 64.75 MB 
[==========================================================================================================================================================================================================================================================================================================================================================================================================================================================================================================================]
 100.00 % 2.85 MB/s 

  error: cannot perform the following tasks:
  - Mount snap "ubuntu-core" (122) ([start snap-ubuntu\x2dcore-122.mount] 
failed with exit status 1: Job for snap-ubuntu\x2dcore-122.mount failed. See 
"systemctl status "snap-ubuntu\\x2dcore-122.mount"" and "journalctl -xe" for 
details.
  )
  $ ls -la /snap
  total 4K
  drwxr-xr-x 3 root root 4096 Aug  8 17:49 ubuntu-core
  $ ls -la /snap/ubuntu-core/
  total 4K
  drwxr-xr-x 2 root root 4096 Aug  8 17:49 122
  $ ls -la /snap/ubuntu-core/122/
  total 0K
  $ systemctl status "snap-ubuntu\\x2dcore-122.mount"
  ● snap-ubuntu\x2dcore-122.mount - Mount unit for ubuntu-core
     Loaded: loaded (/etc/systemd/system/snap-ubuntu\x2dcore-122.mount; 
enabled; vendor preset: enabled)
     Active: failed (Result: exit-code) since Mon 2016-08-08 17:49:36 UTC; 6min 
ago
      Where: /snap/ubuntu-core/122
       What: /var/lib/snapd/snaps/ubuntu-core_122.snap
    Process: 31781 ExecMount=/bin/mount 
/var/lib/snapd/snaps/ubuntu-core_122.snap /snap/ubuntu-core/122 -t squashfs 
(code=exited, status=32)

  Aug 08 17:49:35 my-host systemd[1]: Mounting Mount unit for ubuntu-core...
  Aug 08 17:49:35 my-host mount[31781]: mount: /snap/ubuntu-core/122: mount 
failed: Unknown error -1
  Aug 08 17:49:36 my-host systemd[1]: snap-ubuntu\x2dcore-122.mount: Mount 
process exited, code=exited status=32
  Aug 08 17:49:36 my-host systemd[1]: Failed to mount Mount unit for 
ubuntu-core.
  Aug 08 17:49:36 my-host systemd[1]: snap-ubuntu\x2dcore-122.mount: Unit 
entered failed state.

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