Description of problem:
The name of the overlay filesystem changed from overlayfs to overlay at some point. Support for this was added in commit 38b3491 - https://github.com/lxc/lxc/commit/38b34913fad2a4bcc842c2c377c0cb7bb90abe0f, which was made after the release of lxc 1.0.7. It looks like this change should be available in LXC releases 1.1.1 and later.
Since Centos - 7.1 kernel is not compatible with LXC - 1.1.1, need to integrate this fix to the LXC 1.0.7 rpm in EPEL repository.
Stack exchange link explaining the issue further: http://stackoverflow.com/questions/29941305/lxc-clone-not-working-with-overlayfs-in-centos-7
>[#] > lxc-clone -B overlayfs -s container2 container3
>lxc_container: bdev.c: overlayfs_mount: 2237 No such device - overlayfs: error mounting /data/main/lxc/container2/rootfs onto /usr/lib64/lxc/rootfs options upperdir=/data/main/lxc/container3/delta0,lowerdir=/data/main/lxc/container2/rootfs,workdir=/data/main/lxc/container3/olwork
Created attachment 1080842 [details]
Patch pulling 38b34913 to fix bdev.c erroring on not finding 'overlayfs'
Created attachment 1080843 [details]
SRPM with patch, tested working
This is actually upstream commit 388db0d9 (on the stable-1.0) branch, and will be in 1.0.8.
However, as there is a pending security update, I think I'll include the fix.
lxc-1.0.7-4.el7 has been submitted as an update to Fedora EPEL 7. https://bodhi.fedoraproject.org/updates/FEDORA-EPEL-2015-3cdbf28493
lxc-1.0.7-4.el7 has been pushed to the Fedora EPEL 7 testing repository. If problems still persist, please make note of it in this bug report.
If you want to test the update, you can install it with
$ su -c 'yum --enablerepo=epel-testing update lxc'
You can provide feedback for this update here: https://bodhi.fedoraproject.org/updates/FEDORA-EPEL-2015-3cdbf28493
lxc-1.0.7-4.el7 has been pushed to the Fedora EPEL 7 stable repository. If problems still persist, please make note of it in this bug report.