So From an ansible with host localhost I am trying to run ansible command directly inside a docker container (command can be anything from lineinfile to copy). The main reason I am trying to do this is so that I cam seamlessly use ansible task on docker (Docker exec is NOT an appropriate solution).
I am currently trying to achieve this using connection: community.docker.docker. I want to this on a task block and not at the playbook level hence why it looks like it does. Ideally I can the params in the template without creating an additional inventory.

Heads up the playbook is truncated but you can assume all missing vars are present. the issue is main. The part where I copying Let’s encrypt is important. The fact that I can start a container and docker_exec works makes me thing the error I get

fatal: [localhost -> instance-139.xxx.xxx.xxx]: FAILED! => {
    "msg": "docker command not found in PATH"
}

is not supposed to happen.

Here is a truncated version of my ansible playbook

- name: Create an API instance
  hosts: localhost
  gather_facts: no
  collections:
    - linode.cloud
    - community.docker
  tasks:
    - block:
      - name: Linode IPS
        debug:
          msg: "{{ linode_ips }}"
      - name: Update apt and install dependencies
        apt:
          update_cache: yes
          name: "{{ item }}"
          force_apt_get: yes
          state: present
        loop:
          - apt-transport-https
          - ca-certificates
          - curl
          - gzip
          - software-properties-common
          
      - name: Add Docker GPG key
        apt_key:
          url: https://download.docker.com/linux/ubuntu/gpg
          state: present

      - name: Add Docker repository
        apt_repository:
          repo: deb https://download.docker.com/linux/ubuntu focal stable
          state: present

      - name: Install Docker
        apt:
          name: docker-ce
          state: present
          force_apt_get: yes
          update_cache: yes

      - name: Start and enable Docker
        systemd:
          name: docker
          state: started
          enabled: yes

      - debug:
          msg: "Registry: docker.registry.aksantinet.com/{{ host_group }}"

      - name: Pull the image from the registry
        community.docker.docker_image:
          name: "docker.registry.aksantinet.com/{{ host_group }}"
          tag: latest
          source: pull

      - name: Run Docker container
        community.docker.docker_container:
          name: "{{ container_name }}"
          image: "docker.registry.aksantinet.com/{{ host_group }}"
          network_mode: host
          state: started
          capabilities:
            - NET_ADMIN
          devices:
            - /dev/net/tun:/dev/net/tun
          privileged: yes 
        become: yes
        
      - name: Copy LetsEncrypt from ansible to Docker
        become: yes
        block:
        - lineinfile:
          path: "test"
          line: "example"
          create: yes
          state: present
        - ansible.builtin.copy:
            src: /etc/letsencrypt/
            dest: /etc/letsencrypt/
        - shell: nginx
        - shell: nginx
        vars:
          ansible_docker_host: "{{ container_name }}"
          ansible_connection: docker
      - name: Instance added
        debug: 
          msg: "Addded instance at {{ linode_ip }}"
      delegate_to: "instance-{{ linode_ip }}"  

Main points are

• Want to run tasks inside the container docker
• I can execute other commands before so I am confused as to why it does work with connection: docker (same ssh: user)
• The delegate to is for the docker host