Build isolation - Docker container based builds in Bamboo 6.4.0 Finally, it is possible in Bamboo to let a build run in a Docker container without dealing with agent configuration.

The system just asks for a image.

Now, what about the underlying infrastructure, what happens there? 
Will then Bamboo server host just spawn containers locally (which limits horizontal scalability)?
Yes, you are correct. Bamboo will spawn the build containers on the agent that the build is running on (either Local, Remote, or, Elastic - depending on your configuration).

In order for this to work the agent will require Docker to be installed and running.