(In which solution, the VTEPs of a VXLAN tunnel can be both vSwitches and physical...

In Huawei data center network design, VXLAN overlay deployment models are categorized based on where VTEPs (VXLAN Tunnel End Points) are located. These include host-based overlay, network-based overlay, and hybrid overlay.

In a host overlay , VTEPs are implemented only on vSwitches (such as those within hypervisors), and physical switches only provide IP transport (underlay). In a network overlay , VTEPs are deployed only on physical switches (typically leaf switches), and servers are unaware of VXLAN encapsulation.

The hybrid overlay model combines both approaches. In this design, VTEPs can exist on both vSwitches (inside virtualized hosts) and physical switches (such as leaf devices). This allows greater flexibility, supporting mixed environments where some workloads use hypervisor-based encapsulation while others rely on hardware VTEPs for higher performance or integration with bare-metal servers.

Huawei CloudFabric supports hybrid overlay to enable smooth evolution from traditional to fully virtualized environments. Therefore, the correct answer is Hybrid overlay (C) .