Are you running KVM and LXD on the same machine?
I am, yes.
Wouldn't this be the expectation? in many if not most cases?
If you know my particular case, yes it would be an expectation. In a more common scenario, no, not so much.
Wouldn't you typically have LXD on a hypervisor?
LXD is a Type-C hypervisor, so while having it on top of a Type 1 is common, having it on bare metal is also common.