I noticed something interesting while extracting the contents of ESXi 5.1 ISO for some kickstart configurations ....

Do you see it? It's a VMXNET3 driver for the VMkernel! I also confirmed by running the following ESXCLI command querying for the VMkernel module "vmxnet3":

# esxcli system module get -m vmxnet3
Module: vmxnet3
Module File: /usr/lib/vmware/vmkmod/vmxnet3
License: GPL
Version: Version 1.1.32.0, Build: 799733, Interface: 9.2 Built on: Aug  1 2012
Signed Status:
Signature Issuer:
Signature Digest:
Signature FingerPrint:
Provided Namespaces:
Required Namespaces: [email protected], com.vmware.vmkapi@v2_1_0_0

***Disclaimer***: This is for educational purposes only, this is not officially supported by VMware. Use at your own risk. There is also a mention of this in the vSphere 5.1 release notes that VMs running on nested ESXi hosts using VMXNET3 driver could potentially crash. Again, not supported user at your own risk.

Next I decided to create a Nested ESXi 5.1 VM, but instead of selecting the e1000 driver which was the only network adapter type that would function for running a nested ESXi host, I choose the VMXNET3 adapter and to my surprise ESXi's networking stack was fully functional.

You can see from the above screenshot, I have a two VMXNET3 network adapters for my nested ESXi 5.1 VM. Here are two additional screenshot of the physical adapters as seen by nested ESXi 5.1 host and you can see that it shows up as VMware Inc. VMXNET3

I have not tried any performance tests, so not sure if there are going to be any significant benefits but pretty cool nonetheless!