Thanks @azazel75. That got me looking in the right direction.
The problem was that dockerd must have been originally selected some other storage driver. Somewhere along the line, it changed its mind and decided to use zfs which because it hadn’t been configured broke. The reason why the other machine was working is because it choose the device-manager storage driver. I don’t know why the difference. Both machines are configured similarly.
I solved it by disabling docker and explicitly configuring for the zfs storage driver as discussed in Use the ZFS storage driver | Docker Docs as so:
# sed -i 's/virtualization.docker.enable=true/virtualization.docker.enable=false/' configuration.nix
# nixos-rebuild switch
# rm -rf /var/lib/docker # no need to save; nothing I want to keep
# zfs create -o mountpoint=/var/lib/docker bigpool/docker
# sed -i 's/virtualization.docker.enable=false/virtualization.docker.enable=true;\nvirtualisation.docker.storageDriver = "zfs"/' configuration.nix
# nixos-rebuild switch
# docker version # succeeds