With vSphere 5, you can run 64-bit virtual machines on nested ESXi hosts. Read about more of the new capabilities with vSphere 5.
The cornerstone to any VMware vSphere lab is the ability to create a "virtual" datacenter that can run on a desktop, a laptop, or a server system. The basic premise is that with VMware ESXi we can create a virtual machine that runs ESXi. It can be difficult to wrap your head around at first, but with this, we can run an entire sample VMware vSphere environment on one system. (I wrote a step-by-step guide on how to do this with VMware vSphere 4.)This functionality does have limitations. The biggest one is that with vSphere 4 and earlier versions, we could not power on 64-bit guest operating systems on a nested ESXi host. Good news... you can do that in vSphere 5! Not only can we continue to power on nested ESXi hosts, but we can power on 64-bit guest virtual machines in that environment. Note: This is a test environment tool. Under no circumstance does VMware or anyone else encourage this to be a production configuration -- it's a learning lab.
Since it is great for a lab environment, there's something else you can do that is so cool: ESXi 5 will allow a nested Hyper-V virtual machine to run and power on a virtual machine. That's right -- you can light up the competition right on ESXi. I've done parts of this before to learn aspects of System Center Virtual Machine Manager 2008 R2, though it wasn't very useful because we weren't able to power on any guest virtual machines. This is a big step because we can run a lot more in our virtual lab capabilities with ESXi. The only catch we have to watch out for is the newly imposed memory limits; the free version of ESXi supports up to 32 GB of RAM per host, so keep that in mind for any use cases you may have.
There are a number of resources explaining the virtualization lab capabilities of ESXi 5, but the best in my opinion is from VMware engineer Eric Gray. His recent post about ESXi 5's virtualization capabilities on his personal VCritical blog is a good starting place.
Do the expanded embedded virtualization options appeal to you? If so, how will you use these new capabilities? Do you think the memory limit will get in the way? Post your comments in the discussion.