To provide controlled Layer 2 network connectivity between virtual machines running on the same hypervisor, a virtual switch provided by the hypervisor (B) can be used to manage internal VM traffic. Additionally, a virtual switch running as a separate virtual machine can also facilitate this connectivity. A single trunk link to an external Layer 2 switch (A) or a single routed link to an external router on stick (D) would not be contained within the hypervisor environment. VXLAN fabric (E) is used for overlay networks across different hosts and requires additional tunneling configuration. Source 1:https://www.cisco.com/c/dam/en/us/products/collateral/switches/nexus-1000v-switch-vmware-vsphere/at_a_gl Source 2:https://www.cisco.com/c/en/us/td/docs/unified_computing/ucs/sw/vm_fex/vmware/gui/config_guide/2-1/b_GU