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First, you should something decent, not DietPi. You've Armbian for a ready to go experience or official Debian.
Once you get into something Debian 12, you can run LXD/LXC as a containerization / virtualization solution and use the same Pi to run the official HA VM image and whatever else you would like.
Why is dietpi a worse choice? it's still basically debian (11).
I've chosen DietPi because of their sane defaults that I would have to setup myself like vm swappiness, fs noatime, tmp journal, and some more I am not even aware of.
Armbian has sane defaults for SBCs as well (yes log2ram so you won't burn SD cards) and it is way more stable and polished than DietPi with less overhead. About bare Debian, you've the images I linked to and you can make it log to the ram with a simple line in systemd's config.