VXLAN- NEXUX 1000 VTEP

I am having trouble visualizing how the VMKernel or VTEP interface is situated within the nexus 1000v architecture.    How do the packets get directed.   The  VM connects to a VXLan port profile and is then directed out the interface that connects to the physical interface.  How and where does the  VTEP fit into this equation?
sectelAsked:
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sectelAuthor Commented:
I think I have the solution.

I found a good article that explaine the coding,

http://cirrusly.wordpress.com/2012/02/08/basic-vxlan-configuration/ 

Effectively there is five phases of configuration.

1) create a port profile for the external interface, this is a ethernet profile

2) create a VMKNIC profile.  This profile will be employed by the VMKernel NIC that will be used to provide a souse and destination to the VXLAN encapsulated packed.  Also, this interface has to be configured as VXLan capable.

3)On VCenter, create a Vmkernel nic and affix the profile listed above to this profile.  Provide an IP address to the Vmkernel interface

4)Globally turn on Segmentation and then create a Bridge-domain profile.  This profile is where the segment ID and multicast IP are created.

5)Create a port-profile to attach to the actual VM.   Map the bridge domain in (4) above to this port profile.

I am still a little confused as to where the Vmkernel nic created in phase 2 and 3 above logically fits within the design.  I am assuming that is must somehow logically get tied to the port profile created in phase 5 above but nothing I have read identifies the logical order.
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rharland2009Commented:
http://blogs.cisco.com/datacenter/digging-deeper-into-vxlan/

Based on the above blog, here's how I read it.

The VTEP is an entity with layer 2 on one side and layer 3 on the other. It collects info about the local layer 2 stuff, and uses its layer 3 side to pass that long to other VTEPs.
Not sure if that answers your question, but it makes sense!
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sectelAuthor Commented:
I provided the most accurate response
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