After coming acroos the following statement, i thought it is a good place to place it here.
My question is, why did vmware did it as a default entry ?
In this post, it is stated that it is OK to remove the 127.127.1.0 entry. This would seem reasonable, except that if the NTD daemon on the ESX host fails see a response from an NTP server in the list, it will quit. As such, if the NTP server goes down for a short time, or your Internet connection is disrupted, etc your ESX host will stop syncing. Best practice is to leave this entry in place, to at least the NTP daemon will keep running, and wait for the remote NTP server to come back online.
NTP uses the pseudo IP address 127.127.1.0 for the local clock (do not mix up with 127.0.0.1 which is the IP of the localhost).
NTP daemon uses a drift mechanism and is able to measure the accuracy of the local clock. After working for a while, comparing the local clock to any other NTP source, it can evaluate its drift. When you lose the link to the external time source, NTP daemon maintains a confident time measure by using the local clock and adjusting it with its drift.
I would suggest to keep this IP address as one of your NTP time source.