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Seems like they run the Debian in a KVM virtual machine, and containers inside that?

Any links for more info about containers vs VM there? The article just says:

"That’s because Google is going to start shipping Chrome OS with a custom virtual machine that runs Debian Stretch, the current stable version of the operating system."

I have been using this on my pixelbook and, unless I am wildly mistaken, it's generating an LXC container. Android apps for instance all run inside a single container for them as well

The container itself is running Debian Stretch. However, for someone not using this it can be easily misinterpreted to mean a VM. Functionally it's not much different.

No it is a container on top of a VM. Different kernels. Android is just a container sharing a common Linux container with ChromeOS.

Both. Machine containers on top of a VM.