NixOS doesn’t handle stateful application data at all (especially it doesn’t touch home directories at all other than creating them, though there’s home-manager if you wish to do that). But I think big incompatible updates are kept between major NixOS versions, at least for stuff like databases, and I’ve never ran into this being an issue, except for when I wrote some configuration to move some files to new locations and then wanted to roll back, but that’s on me (and it was easy to cherry-pick the parts that used the new paths). Having snapshots for /var and so on might be a good idea, though personally I just keep daily backups of those directories.

The VM is less useful for testing package upgrades and other small changes and more for configuration you don’t want to run on the actual server yet (such as when you’re writing it at the moment and it’s not complete and just want to test how much of it works), like testing software locally before pushing it to production. The VM build takes about as much time as building the normal configuration (and very short if that is already built). It produces a script which starts a QEMU VM using a blank disk file which it will reuse (of course, some services may fail due to missing keys). But I don’t think that’s a problem and it also kinda is another check that your system won’t horribly fail if you ever want to reinstall it completely before restoring a backup.