Are there any benefits of running Proxmox and virtualizing everything, vs having a host OS and running Docker and libvirt to host VMs for services that need it? I know that Proxmox does some storage management etc, but it seems like I could get everything it does with a well-managed host OS + ZFS/btrfs and using virtualization tools
I think this ^ is precisely what Proxmox is, its just purpose built for this purpose and has a lot of nice features and conveniences for this use case.
Proxmox is a host OS (customized Debian) built for virtualization (KVM/Qemu) and containers (LXC containers).
I think you can. It just depends whether you’d prefer to DIY it yourself or whether you’d like a purpose built solution that is already pre-configured for the task, both approaches are valid and can achieve much the same outcome. The nice thing about proxmox is its mostly ready to go and well configured out of the box (with the exception of not supporting encryption ootb)