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Welcome to the Community,
flat.vmdk files indeed work with VMware Workstation. However, the default is a sparse .vmdk file format for several reasons, e.g. to save disk space, be able to store the split .vmdk files on file systems which don't support large files, ....
The VMFS file system on ESXi hosts supports large files, and also support thin provisioning (which is a file system feature) to save disk sapce.
Thank you for your prompt reply!