vSphere with Tanzu requires the use of a vSphere 7 Virtual Distributed Switch (VDS) for host transport node traffic. You cannot use the NSX-T VDS (N-VDS) for host transport node traffic with vSphere with Tanzu.
VDS Is Required
vSphere with Tanzu requires a converged VDS that supports both vSphere 7 traffic and NSX-T 3 traffic on the same VDS. With previous releases of vSphere and NSX-T, you have one VDS (or VSS) for vSphere traffic and one N-VDS for NSX-T traffic. This configuration is not supported by vSphere with Tanzu. If you attempt to enable Workload Management using an N-VDS, the system reports that the vCenter cluster is not compatible. For more information, see Troubleshoot Workload Management Enablement Cluster Compatibility Errors.
If you have upgraded to vSphere 7 and NSX-T 3 from previous versions, you must uninstall the N-VDS from each ESXi transport node and reconfigure each host with a VDS. Contact VMware Global Support Service for guidance.