Comment 30 for bug 1611078

And in some cases squashfuse may not have the proper dep of fuse. And you may need to manually:

apt install fuse # in addition to squashfuse

<stgraber> looks like squashfuse is missing a dependency on "fuse"
<stgraber> which is part of the official Ubuntu images but not in the community images
<stgraber> so if you use "lxc launch ubuntu:16.04" it'll work (after you install squashfuse)
<stgraber> but if you use "images:ubuntu/xenial" you'll need to install "fuse" and "squashfuse"