check for fragmented packets
We have tried following this blog, it did not help when the MTU is to 9000 for underlay vlan extension using HCX L2 Extension.
https://hcx.design/2019/12/13/leveraging-hcx-services-with-jumbo-mtu/
I see below MTU recommendations from AVS Document. https://docs.microsoft.com/en-us/azure/cloud-adoption-framework/scenarios/azure-vmware/eslz-network-topology-connectivity
VMware HCX migrations can use HCX L2 extension. Migrations that require Layer 2 extension also require ExpressRoute. S2S VPN is supported as long as the minimum network underlay minimum requirements are net. Maximum transmission unit (MTU) size should be 1350 to accommodate the overhead of HCX. For more information about Layer 2 extension design, see Layer 2 bridging in manager mode (VMware.com).
Have you upgraded to HCX Enterprise? I would do this if you haven’t by contacting MS support and asking them. Once done, enable Traffic Engineering and change MTU to 1500.
We are using HCX Advanced. Enterprise is going to licensed from Nov 2022 right. Did you face ping drop issue in HCX Advanced and did it fix using HCX Enterprise ?
https://azure.microsoft.com/en-us/pricing/details/azure-vmware/
12 month promotion: VMware HCX Enterprise Edition will be available for customers to add and run with their Azure VMware Solution environment free of charge until 10/1/2022.
If you don’t want to use Enterprise then you need to do some testing to find out what the maximum frame size you can get through and then set that within HCX for the NE uplinks.