Thank you, this made me realize I assigned a wrong (too little) number for uids. It did not fix my issue however. I still see

  (dev) $ podman info
  ERRO[0000] running `/usr/bin/newuidmap 3427 0 1000 1 1 100000 65536`: newuidmap: open of uid_map failed: Permission denied
  Error: cannot set up namespace using "/usr/bin/newuidmap": exit status 1

I tried a solution I found on Red Hat's Customer Portal:

  (root) # setcap cap_setuid+ep /usr/bin/newuidmap
  (root) # setcap cap_setgid+ep /usr/bin/newgidmap

Also did not work. I can run

  (root) # podman info 

just fine as root. This leads me to believe there are some other problems with my non-root user permissions.

EDIT: It probably makes little sense, to run rootless on top of an already unprivileged LXC. I just wanted to give vscode server it's own non-root user in there. Oh well...