I've got a VM that was stable under 6.7 U2 which is now unstable (hangs the entire VMware system after ~36 hours) upon updating ESXi to 6.7 U3b. When I view the VM details is says that its compatibility is "ESXi 6.7 U2 virtual machine" - is there a need/way to update this VM to 6.7 U3b, or are compatibility upgrades limited to major versions only?
The virtual HW versions usually provide new features, and may be required for security reasons.
Other than this, you don't necessarily upgrade your VMs' HW versions. New ESXi versions support older HW versions.
For a list of these versions, and the product versions for which they were introduced, please see https://kb.vmware.com/s/article/1003746