Jumping back into the VMWare topics.....
One of VMware's key - and extremely cool - features is VMotion. VMotion allows individual virtual machines (let's say a Windows 2003 Server) to be dynamically moved to another VMware server without impact to users. Reading right from VMware's VMotion page:
VMware VMotion technology, unique to VMware, leverages the complete virtualization of servers, storage and networking to move an entire running virtual machine instantaneously from one server to another. The entire state of a virtual machine is encapsulated by a set of files stored on shared storage, and VMware’s VMFS cluster file system allows both the source and the target ESX Server to access these virtual machine files concurrently. The active memory and precise execution state of a virtual machine can then be rapidly transmitted over a high speed network. Since the network is also virtualized by ESX Server, the virtual machine retains its network identity and connections, ensuring a seamless migration process.

Put more simply, the Windows VM is copied to another physical machine, the switch CAM tables are updated with a gratuitous ARP, traffic flows to the new VMWare server, and the old instance is shut down. All of this is completed in about 2 seconds which is short enough to prevent any TCP session failures. Users don't have clue.
VMotion can be started manually (for let's say a change window) or dynamically, based on resource usage, by VMware's Dynamic Resource Scheduler (DRS). If a single VMware server's CPU usage gets above a certain limit, DRS moves a few VMs to another server, balancing the load. Users have no clue.
At the network level, there are two major requirements for VMotion. First, a dedicated, gigabit Ethernet VLAN is needed for VMotion traffic. This dedicated VLAN and bandwidth ensures VMs can be moved without impact to users. Second, and most importantly, the group of servers that VMs can be balanced between must be in the same Layer-2 domain. When a VM moves it cannot change any attributes, like its IP addresses. Thus, all target servers must have connections to the same VLANs as the source VMWare server.
This requirement will definitely lead to an expansion of Layer-2 domains, and thus spanning-tree. VMotion is just too cool and useful to not use. Server teams are going to demand large "VMware Farms" to balance and move VMs around. All of these servers require several physical connections so switch ports will be at a premium. This means more switches and, since all VMware servers must be in the same VLANs, larger spanning-tree fault domains. Spanning-tree and Layer-2 domains were being minimized, or at least significantly controlled, in the last few years in network design best practices. That is likely to begin changing as VMware becomes more mainstream. New technologies like Cisco's VSS will become very important to limit spanning-tree's impact (when it goes wrong...and it will go wrong...or at least one of your engineers will go wrong with it).
Still, VMotion....very cool....
Michael Morris is a communications engineering manager at a $3 billion high-tech company. His background is in enterprise WANs working with telcos, and developing large-scale routing designs. He has worked on networks at government and corporate organizations, including networks at two Fortune 10 companies. In his current role, he leads large-scale IT networking projects and develops and maintains architectural standards for data networks, storage area networks, IP Telephony, and security. Michael is a CCIE and has 11 years experience in networking and communications, including four years as a paratrooper in the U.S. Army. He has a bachelor's degree in MIS from the University at Buffalo. Recently, he was awarded the Network Professional Association® (NPA) Professional Excellence and Innovation Award for his work on network architecture, templates and enterprise MPLS design.
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Have you looked at EoMPLS / VPLS
You bring up an excellent point about VMware ESX being a primary driver in returning L2 technologies to the DataCenter. I am also a big fan of L3 to the edge designs, as routing protocols in my opinion are more deterministic, and lend themselves to troubleshooting much easier then Spanning Tree.
That being said, have you looked at combining the two technologies by using EoMPLS or VPLS to extend l2 bridging between ESX clusters while keeping as much of your DataCenters as "L3" as possible.
--Colin
RE: Have you looked at EoMPLS / VPLS
It's an interesting concept on how to extend L2 domains inside the DC without trunking and spanning-tree everywhere. However, you have a trade-off then. Less spanning-tree and more MPLS. Most enterprises are getting their feet wet with MPLS, not looking to put it in the middle of their DC. I would be more concerned with users and design with MPLS in that case.
Plus, the Layer-2 domain still hasn't gotten smaller...it's just connected now over a L3 domain.
Interesting idea though....
Michael J. Morris