Nested Virtualization is an extremely useful tool that helps customers easily test and try out new VMware products and solutions before rolling that into a proper development environment for further validation. This is especially handy for those wanting to setup an NSX-based environment and simulating their actual deployment topology, configuration and upgrade workflows.
In this past year, I have seen a 10x increase in the number of NSX-T based questions that have come up from customers and our field, the adoption of NSX-T is definitely in full swing. As expected, questions about running Nested ESXi on top of a physical NSX-T deployment has come up and there has actually been several variations that have been asked about whether that is Nested ESXi using VSS, VDS, NSX-V or even NSX-T running on top of an N-VDS, which is the virtual switch that NSX-T uses.
Luckily all of these combinations work and just require some basic configuration changes within NSX-T. However, before I continue, let me remind folks again that VMware does NOT officially support Nested Virtualization.