What you want to use is a reference (and not a reference set) between the RACK entity and the server entity with the owner being the RACK entity. This way, a RACK can have multiple servers, but a server can only have a single RACK. (Just like a customer can place multiple orders, but an order can only be related to 1 customer)
See the link below for more information
this means that i loose the add association functionality that the reference set selector brings with itself. So i need to mimic this behaviour using microflows?
If you build a form with a dataview containing the entity rack and in that dataview a datagrid or template grid with server_rack/server you can now create/edit servers for this rack using a serverNewEdit form.