Yes, one of the main downsides of Docker images using Nix is the 128 layer limit. It means we have to use a heuristic to combine packages into the same layer and losing Nix’s package granularity. When building containers with Nix packages already on a Nix binary cache you also have to transform the Nix packages into layer tarballs effectively doubling the storage requirements.
Nix-snapshotter brings native understanding of Nix packages to the container ecosystem so the runtime prepares the container root filesystem directly from the Nix store. This means docker pull == Nix substitution and also at Nix package granularity. It goes a bit further with Kubernetes integration that you can read about in the repo.
Let me know if you have any other questions!