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You talk like there is not in between containers and VMs. You can use both.
I agree with this, though I think a lot of people don't differentiate between operating system containers like LXC provides and application containers like docker provides.
No, that would make no sense and is obviously not what i meant.
But you could separate the arr stack from things like pihole with a vm. For example you could pin one thread to that VM so you will not bottleneck your DNS when you are doing heavy loads on the rest of the system. This is just one example what can be done.
Just because you do not see a benefit, does not mean there is none.
Also, VMs are not "heavy" thanks to virtualization technology built into modern hardware, VMs are quite light on the system. Yes they still have overhead but its not like you are giving up big percentages of your potential performance, depending on the setup.
What he said. 👏