I'm not convinced what you run into is a specific podman issue. It's a resource issue and configuration issue likely. "vanila" podman with proper rootless containers will run as much workload as machine can handle from my experience. My company costomers seem to be running production workloads with it just fine.
Oh wait, by rootless container you really meant running podman rootless? still don't see an issue though. What specifically are you doing? I mean, what's the configuration and what's the workload?
when this error happens, I cant run any podman commands without a core dump. i.e I cant podman imagespodman ps and so on... The only solution is to delete the storage folder manually, pull all the images again. and it's back to normal.
The practical limit to the number of containers you can run on one system is in the high hundreds or more thousands, depending on how you configure some things, and your available hardware. It's certainly more than you'll even use unless you get into some auto-scaling swarm config stuff.
The issue is more about resource limits, and access to shared resources. I'd start by trying to figure out if there are certain specific containers that don't play well together. Bring your setup online slowly, one container at a time, and take note of when things start to get funky. Then start testing combinations of those specific containers. See if there's one you can remove from the mix that suddenly makes things more stable.
It seems to be caused by UserNS=keep-id . when adding it to an image with a lot of files, podman hangs for a while, then crashes when doind its chown. This causes some layers to be invalid.