I think the underlying problem is improper fragmentation of netlink
messages sent to the WireGuard device by systemd v237 in the
set_wireguard_interface function:

https://github.com/systemd/systemd/blob/v237/src/network/netdev/wireguard.c#L107

Appending netlink message data can fail if the message size limit has
been exceeded. This can happen if there are too many peers or ip masks
in the netdev file, and the v237 code doesn't seem to handle this
properly. It's supposed to split the data up into message fragments, but
instead it can end up writing incoherent data to the netlink socket or
end up in an infinite loop.

This issue was fixed in systemd v241 by reworking the code over a few
commits:

https://github.com/systemd/systemd/pull/11418
https://github.com/systemd/systemd/pull/11580 (this fixed issues with the first 
PR)

I found some comments (now resolved) on one of the commits illuminating:

https://github.com/systemd/systemd/pull/11418/commits/e1f717d4a02e15ae11a191dd4962b2f4d117678d

Mic92 on 2019-01-15:

> The idea is that netlink's messages are limited in size. If an
interface has many peers, addresses or ip masks then the configuration
might not fit into one message and has to be split across different
messages.

yuwata on 2019-01-15:

> Yeah. I guess there was some bug in the cancellation logic, and it
causes infinite loop with the magic number 23.

The infinite loop with 23 peers yuwata mentions is a reference to Leonid's bug 
report from January:
https://bugs.launchpad.net/ubuntu/+source/systemd/+bug/1811149

I expect that backporting these fixes from v241 to bionic's systemd v237
branch would resolve both my issue and the issue reported by Leonid.

I realize this is a non-trivial change and there's a regression risk.

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https://bugs.launchpad.net/bugs/1853956

Title:
  34 wireguard peers result in invalid peer configuration

Status in systemd package in Ubuntu:
  New

Bug description:
  ubuntu server 18.04.3 LTS
  systemd 237-3ubuntu10.31
  wireguard 0.0.20191012-wg1~bionic from PPA.

  We're using systemd-networkd to configure wireguard via
  wireguard.netdev and wireguard.network files in /etc/systemd/network/.
  All endpoints have IPv4 addresses.

  When we include 34, 35, or 36 [WireGuardPeer] entries in the netdev
  file some peers are configured incorrectly. The affected peers seem to
  be related to the total number of peers (counting from 0 here):

  33 peers: No issue
  34 peers: Peer 1 and 2 fail
  35 peers: Peer 2 and 3 fail
  36 peers: Peer 3 and 4 fail
  37 peers: No issue

  In all cases peer 0 is functional. For an affected pair of peers A and
  B, peer A ends up with the allowed IP address range of peer B. Peer B
  ends up with no allowed IP addresses. This can be seen in the output
  of wg. The connections to both peers fail because of incorrect address
  range assignments.

  We first encountered this issue in a production environment when we
  moved from 33 to 34 unique peers on each server. The issue was
  reproduced on 3 different physical servers with similar configuration
  by adding and removing peer 34.

  The [WireGuardPeer] entries do not need to be unique to reproduce the
  issue. In my testing I used 6 distinct peers and then used 28 or more
  identical copies of a 7th peer. The results were the same.

  In January 2019 a bug was reported that was also related to the number of 
wireguard peers, but the description seems sufficiently different from our case 
that I felt I should file a distinct bug report. Here's a link to that report 
in case I'm wrong about that:
  https://bugs.launchpad.net/ubuntu/+source/systemd/+bug/1811149

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