diff --git a/README.md b/README.md
index 47d81b9..7c40db8 100644
--- a/README.md
+++ b/README.md
@@ -190,6 +190,27 @@ The container is removed automatically when the session ends. If the script
 is killed with SIGKILL the exit trap won't fire and the container may be
 left running; remove it with `docker rm -f <container-name>`.
 
+### Smolmachines backend (experimental, macOS-only)
+
+A second backend runs the agent in a smolvm micro-VM (libkrun) with the
+sidecar bundle still in Docker. Selected via
+`CLAUDE_BOTTLE_BACKEND=smolmachines ./cli.py start <agent>`. Requires
+`smolvm` on PATH (`curl -sSL https://smolmachines.com/install.sh | sh`).
+
+**Known limitation, v1:** smolvm's TSI uses macOS networking, and
+Docker Desktop's container IPs aren't reachable from macOS, so the
+smolmachines bottle dials the sidecar bundle through host loopback
+port-forwards (`127.0.0.1:<random>`). TSI filters by IP only, so the
+allowlist is `127.0.0.1/32` — meaning the agent VM can reach **any
+service bound to macOS's loopback**, not just the bundle's published
+ports. Practical implication: while a smolmachines bottle is running,
+host-local dev services (postgres on 5432, dev servers, etc.) are
+reachable from inside the agent even if you intended them to be
+host-private. The docker backend keeps the bottle on a `--internal`
+docker network and doesn't have this issue. A future revision will
+narrow this via a per-bottle loopback alias + host-side proxy (see
+PRD 0023's "loopback scoping" section).
+
 ## Manifest
 
 Bottles and agents live as Markdown files with YAML frontmatter under
diff --git a/docs/prds/0023-smolmachines-backend.md b/docs/prds/0023-smolmachines-backend.md
index 5e511a0..a98b1c5 100644
--- a/docs/prds/0023-smolmachines-backend.md
+++ b/docs/prds/0023-smolmachines-backend.md
@@ -600,6 +600,22 @@ PRD 0024's bundle image is a prerequisite — this PRD assumes
    the plan is to filter on a deterministic name prefix
    `claude-bottle-<slug>` + cross-reference with on-disk metadata
    under `state/<slug>/`.
+8. **Loopback scoping (Docker Desktop pivot).** The original
+   design pinned the bundle at a docker bridge IP and set TSI's
+   allowlist to `<bundle-ip>/32`. On Docker Desktop / macOS the
+   daemon runs inside its own Linux VM, so bridge IPs aren't
+   reachable from macOS networking — TSI's syscall impersonation
+   can't reach them. Resolution: publish each agent-facing bundle
+   port on host loopback (`-p 127.0.0.1::<port>`) and set TSI to
+   `127.0.0.1/32`. **This widens the TSI allowlist to anything
+   bound to macOS's loopback** — postgres, dev servers, other
+   bottles' published ports, mDNSResponder, etc. The agent can't
+   reach them by intent, but TSI can't filter by port. Follow-up
+   to scope back: bind each bottle's bundle ports on a per-bottle
+   loopback alias (e.g. `127.0.0.2` for bottle A, `127.0.0.3` for
+   B) added via `ifconfig lo0 alias`, set TSI to that single /32.
+   Needs sudo for alias setup; a small daemon-or-script we ship
+   alongside the launcher could handle it.
 
 ## References