Thanks for digging this “shallow” (lol. What you dug up is equal to my senior technician explaining the full tech stack of a client).
Anyway, I host the system disk on local disk and NFS storage acts as the mass storage for my VMs like my media server for jellyfin).
And I also do daily backups with Veeam Backup and Replication of both my most important files of my media server and the important VMs.
So in case of a data failure it should be more or less fine.