adding a VirtualMachine or instance into the ServiceMesh requires the annotation

sidecar.istio.io/inject: true

This annotation is deprecated upstream https://istio.io/latest/docs/reference/config/annotations/#SidecarInject and instead shall be on labels instead

channel: stable
installPlanApproval: Automatic
name: kubevirt-hyperconverged
source: redhat-operators
sourceNamespace: openshift-marketplace
startingCSV: kubevirt-hyperconverged-operator.v4.19.1

everytime

1. Create a VM/VMI/Template
2. Add the sidecar injection label
3. in the virt-launcher pod the istio-proxy container will not get healthy and therefor break communication to any mesh member 

$ oc get pods virt-launcher-centos-stream9-yellow-pigeon-76-6bl5f -o yaml | yq -r '.status.containerStatuses[]|{"name": .name, "ready": .ready, "started": .started}' -c 
{"name":"compute","ready":true,"started":true}
{"name":"guest-console-log","ready":true,"started":true}
{"name":"istio-proxy","ready":false,"started":false}

$ oc get pods virt-launcher-centos-stream9-yellow-pigeon-76-7s5cb -o yaml | yq -r '.status.containerStatuses[]|{"name": .name, "ready": .ready, "started": .started}' -c 
{"name":"compute","ready":true,"started":true}
{"name":"guest-console-log","ready":true,"started":true}
{"name":"istio-proxy","ready":true,"started":true}

Changing the label to the deprecated annotation brings the pod into healty state. Since the annotation is deprecated we need to provide the functionality with the label applied instead.