A virtualized computing system includes: a host cluster including hosts executing a virtualization layer on hardware platforms thereof, the virtualization layer configured to support execution of virtual machines (VMs), the VMs including a pod VM, the pod VM including a container engine configured to support execution of containers in the pod VM, the pod VM including a first virtual disk attached thereto; and an orchestration control plane integrated with the virtualization layer, the orchestration control plane including a master server in communication with a pod VM controller, the pod VM controller configured to execute in the virtualization layer external to the VMs and cooperate with a pod VM agent in the pod VM, the pod VM agent generating root directories for the containers in the pod VM, each of the root directories comprising a union a read/write ephemeral layer stored on the first virtual disk and a read-only layer.