Is it possible to distribute physical resources i.e. CPU within a cluster. Does VMware do some sort of application slicing where is can distribute processing across 2 physical machines for 1 virtual machine
At this point ESX does not pool resources from many ESXs host for the use within a single VM. A VM will only be running on a single host at a time. You can group hosts together with DRS which will load balance many VMs across multiple servers. If the load becomes too great on one server, then DRS will vmotion the VM over to a less busy server. There is also the HA option which will restart a VM on another host should the ESX server running the VM suddenly fail.