Head end mode is flood learn concept.Source Hypervisor does the flooding of the tunneled packets which ultimately result in more bandwidth usage and some additional overhead on ESXI host.
Two Tier Mode - Instead of sending X(based on the host count) amount of tunneled copied, it will send few copies ( Based on the TEP subnet group-1 per group) which will result in less bandwidth utilization and less overhead on esxi host so this will be a better option irrespective of L2/L3 fabric .
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