A group of ESXi hosts that are able to communicate with one another over the physical network by means of VTEPs is said to be in the same transport zone. A transport zone defines the extension of a logical switch across multiple ESXi clusters that span across multiple virtual distributed switches.
A typical environment has more than one virtual distributed switch that spans across multiple hosts. A transport zone enables a logical switch to extend across multiple virtual distributed switches and any ESXi hosts that are part of this transport zone can have virtual machines as part of that logical network. A logical switch is always created as part of a transport zone and ESXi hosts can participate in them.
The following figure shows a transport zone that defines the extension of a logical switch across multiple virtual distributed switches:
