Normally you would use different VLANs for TEP and the routing is done via the top of the rack switches. The exact setup can be found in the reference design guide. If your edge is inside the nested environment, you either need to give the ESX virtual server more than one NIC (can all be on the same network) and then use for example pNIC 1 for the ESX host TEP and use pNIC2 for TEP on the edge.

Here is a KB article which requirements for Shared VLAN TEP and under which circumstances the whole thing works.

https://kb.vmware.com/s/article/83743

I've built the whole thing in my LAB before and was going to write a blog article about it for my Company, but I haven't had time yet.