I am new to vmware as well as NSX. What i understand that UDLR/DLR will get pushed on each ESXi host which is part of same transport zone and traffic will be routed from there to NSX Edge for communication to outside. But where exactly NSX edge get installed i mean on which ESXi host. Will it be in control cluster, if yes is traffic from UDLR/DLR from ESXi host traverse to control cluster on which NSX edge is present and will it not be bottleneck.
First and foremost NSX Edge gives us firewall/nat/dhcp/routing functionality. Each Edge is a VM so based on your vSphere design edge can be running on a dedicated Edge_Cluster which will be populated with few hosts or it can be part of management_edge cluster hosts. Since they are VM's they can move around based on DRS balancing.
There are multiple form factors available for ESG and one could deploy ESG in Active-Standby deployment or it Supports 8 way ECMP
Below picture shows the default compute reservation which will be set by NSX manager if there are no values selected.
So based on the requirement if we carefully select the correct Edge form factor, performance bottleneck questions are out of picture. For eg : If you are deploying ECMP edges Quad large is the best option to start with and you always upgrade the instance to higher form-factor. When your N-S bandwidth requirement is higher (> 10G)you can deploy a ECMP model , which can give you 80gb traffic per DLR with fast convergence(No statefull services)
For more information on ESG deployment/design you may please refer VMware® NSX for vSphere Network Virtualization Design Guide ver 3.0
I thing you more asking about distributed routing.
Distributed routing is an kernel module on every esxi on the transport zone and cluster selected to. Consider them as an VRF in a normal network setup.
every instance of DLR on esxi has it owns routing information mac addresses and LIF's - logical interfaces.
there is two possibilities to be used DLR, one is with dynamic routing , like OSPF.BGP plus bridging. second is only for static/ no dynamic routing in.
in scenario one you have DLR control VM which is represented as an VM only on some of the esxi where you specify. Control VM is not a routing machine is just to have a peering with OSPF and BGP instances or for bridging.
in scenario two there is no control vm at all.