Azure Kubernetes Service on Azure Stack HCI: deliver Storage Spaces Direct to containers

Hasnain Shaikh - that's somewhat correct. You'll need an SMB or NFS share that the workload cluster VMs have line-of-site to. Ultimately, the pod connects over SMB/NFS using the creds supplied. The actual SMB/NFS share itself doesn't have to be hosted on the same HCI cluster; it can be anywhere as long as the VMs can reach it. 

A "cheap" and "efficient" way to do this is with a Scale-Out File Server share on your cluster. You'd create a new CSV (vdisk), create the SoFS share, permission it correctly, and then supply that info into the manifest.

Keep in mind that SoFS Role is technically unsupported in Azure Stack HCI, but it does work.