It's the CPU's feature set that makes the difference.
A VM that has been powered on on a newer CPU model cannot be vMotion'd to a host that does not support those CPU features. Allowing such a life migration would most likely cause the VM to panic/blue screen.
In order to avoid such situations, EVC comes into play. Setting the EVC mode on the cluster level to the common (i.e. the oldest CPU model) makes sure that regardless on which host a VM is powered on, only the CPU feature for the selected EVC mode will be presented to the VM.
André