Since making the kernel_t domain confined, files/directories can no longer be created in an overlay merged root that was mounted by the initramfs.

Specifically, this commit introduced the behaviour: https://github.com/fedora-selinux/selinux-policy/commit/1e8688ea694393c9d918939322b72dfb44a01792
Attempting to do one of { create, relabelto, relabelfrom } on files/directories in a merged overlay results in denial messages like the following (eg. using /usr/bin/touch to create a file):

    avc: denied { create } for pid=.... comm="touch" name="testfile" scontext=system_u:system_r:kernel_t:s0 tcontext=unconfined_u:object_r:usr_t:s0 tclass=file permissive=0

The output from audit2why for these denials is:

    Was caused by:
    #Constraint rule:
    #    constrain dir {create relabelfrom relabelto } ((u1 == u2 -Fail-) or (t1 == can_change_object_identity -Fail-)
    #    Possible cause is the source user (system_u) and target user (unconfined_u) are different

When I add back the unconfined_domain_noaudit(kernel_t) optional policy the problem does not occur. Also, any overlay mounts created from the real root system do not exhibit this behaviour. For cases where the target file's user is also system_u, the issue does not occur.

For context, in the system where I encountered this problem I have custom dracut scripts that create copy-on-write overlays for read-only directories in the real root (ie. the real root is a squashfs system). I can reproduce this on a regular Fedora 38 Workstation though. I suspect this issue stems from the switch-root happening between the initramfs and the real root, where systemd moves mounts over.

Reproducible: Always

Steps to Reproduce:
1. Include "overlay" module in initramfs
2. Boot with argument "rd.break=pre-pivot" to obtain shell in the initramfs before pivot-root occurs
3. Create overlay upper/work directories:
   mkdir /run/{fs,wk}
4. Mount an overlay over /sysroot/opt
   mount -t overlay -o lowerdir=/sysroot/opt,upperdir=/run/fs,workdir=/run/wk TEST /sysroot/opt
5. Exit the shell to continue booting
6. Once logged in, attempt to create a file in /opt
   touch /opt/testfile
7. Observe avc denial message in journal/audit.log
Actual Results:  
SELinux denies creation of the file

Expected Results:  
File is created