NSX-T can only use Distributed switched and its a best practice. as per my knowledge NSX-T will not be able to work with virtual switch for overlay networking. You may use Distributed Switch for NSX-T overlay and Virtual switch for non-NSX stuff. but still VDS is recommended for end to end usage be it for NSX overlay or for non-NSX stuff as well.
Distributed switches are eases configuration, management and operations perspective.