It refers to the OCI image format. Think of git for your base operating system. The host system is immutable with full support for easy rollbacks. Stable installs can be pinned permanently for maximum stability. Software installs happen in user space, typically via flatpack and distrobox, so you can reach for any packages you want with minimal fuss. It’s pretty great.
Here is Containerfile from the repo: https://github.com/ublue-os/bazzite/blob/main/Containerfile