On https://dietpi.com/docs/software/media/#snapcast-server-using-mpd-as-an-input-source
In order for snapcast to work correctly, the file should be a FIFO/Pipe, this is not mentioned in the docs.
I personally don't know what's the best configuration, but I'd go for a mkfifo on /etc/... whatever so that the fifo would be persistent (data is volatile anyway). Also if snapcast has an option to create a fifo instead of a file that would be cool, but here they opted for the aforementioned solution
The side-effects of configuring as mentioned in the docs is that the audio mostly loops over the currently cached data.