I have had a few folks ask about Nested ESXi support on VMware Cloud on AWS (VMC), so lets get that out of the way first. Nested ESXi is NOT supported by VMware on any of our platforms, whether that is an on-premises or a cloud environment like VMC or any 3rd party vendors that maybe using VMware software. For those wanting an "official" statement on Nested ESXi support, you can refer to KB 2009916.
UPDATE (02/10/20) - Updated my Automated vSphere Lab Deployment Script to support "basic" Nested vSphere environment running on VMC.
Was asked if it was possible to setup a “basic” Nested vSphere environment for Automation/API testing running in #VMWonAWS
— William Lam (@lamw) February 10, 2020
Now, we all know Nested ESXi works and it runs extremely well on vSphere. In fact, vSphere is the best platform for running any Hypervisor in a VM. This is also true for VMC, you can run a Nested ESXi VM in an SDDC, however there are some caveats compared to what you would experience in an on-prem environment. Below are some of the caveats to be aware of if you are considering running Nested ESXi on VMC.