VXLAN provides the capability to create isolated, multi-tenant broadcast domains across data center fabrics, and enables us to create elastic, logical networks that span physical network boundaries . Basically It encapsulates original packets into a new header (VXLAN), however from a workload perspective you won't see any difference. It's not mandatory to use VXLAN in a NSX design. I would suggest go through NSX documentation and Network and Security Virtualization Software Platform - NSX | VMware to know about various uses cases and design aspects.
There are two main objectives for using NSX :
- Networking (Use the VXLAN)
- Security (Micro segmentation)
If i am looking for the both or for networking. so the VXLAN is mandatory as the VXLAN is responsible for encapsulating the traffic of the vms (L2 and L3 traffic) to be transferred over the VLAN traffic.
If you are looking for the micro segmentation only or the firewall. there is no need for the VXLAN only the NSX manager can handle it.
1- Do we have to use VXLAN in the NSX?
For networking (Routing and switching), it is mandatory. If for micro segmentation only, there is no need.
2- when do we use VXLAN?
We use it when we planning to implement the NSX to handle the virtual networking.
I hope this answer your question and i hope that this become answer or helpful for you. also, for More details and more information just follow my blog http://www.syncgates.com.
NSX is a networking and security solution, for Networking solutions like logical switching, logical routing, logical LB, logical NAT, logical VPN, ....etc sure you have to use VXLAN.
But for security purposes only (Microsegmentation), no need for VXLAN.