Windows Server (Standard and Datacenter editions) licenses include permissions to run unlimited windows containers on top of them. So you would only need to pay for the licenses of your hosts.
I wouldn't call that a caveat so much as SOP for Microsoft licensing. A Windows license does not entitle you to run unlimited Windows VMs on top unless you pay for the more expensive edition.
The "hack" of buying a small number of super beefy servers to save on licensing costs was plugged looooong ago.
If you're using VM isolation, you need licenses for the containerized applications.