Edge VTEP and Host VTEP on seperate VLAN is good ideal, but the bad ideal its need to routable between this 2 vlan/subnets by DC L3 gateway switch.
Host VTEP tunnel will reach the data center Layer 3 gateway then routed back to Edge node via EDGE VTEP VLAN.
This is not efficient and single point of failure at L3 gateway. If the L3 Gateway is firewall , then it will be the bottleneck.
Let say there is issue at L3 gateway , the whole NSX virtual network will down.
VM >>> Host VTEP VLAN (TOR Switch) >>>>>>> Data Center L3 >>>>>> EDGE VTEP VLAN (TOR Switch) >>>>>>> Edge Node
Which is why your network needs to be designed properly with redundant gateways.
Also host to edge tep will be impacted, not a complete outage.
"Also host to edge tep will be impacted, not a complete outage."
>>> It depend. Edge cluster is gateway (T0/T1) , it will totally down. Unless gateway is at DC L3 switch , where VM is connect to Vsphere VDS port-group instead of NSX segment.
Well this is design flaw, which VMware shall fix it.
Not putting the resposibility on the data center network for all east-west and north-south traffic (VTEP tunnel) all transverse thru data center gateway.
Data center switch shall just do the L2, except for managment.
Unless you have state full services on a gateway then lateral switching and logical routing will work.
Only when a packet needs to egress an edge will it be impacted. I suggest you read into NSX logical routing functions
My understanding the routing between segment will be impacted too.
That is incorrect, read my previous response please.