There is a lot of SMB 3 traffic on my platform, which is why we have set our VMs to 8800. Our physical switches are consistently on 9216, VMware's distributed switch supports a maximum of 9000.
Maybe next week I can run tests with 2 test vms and 1500 mtu. If the traffic goes over a vlan portgroup, the geneve overhead is dropped and therefore this traffic is higher. VMware always tests the overlay performance with multistream and then you should get about 20 Gb/s with -P 4 at iperf and almost linespeed with 8800 MTU
But in the real world the results depend on much more than the MTU. It depends on the protocol, whether single or multisession is used, etc. In addition, the number of CPU cores also has an influence on the network performance and the network card used. VMXNET 3 should be used for maximum performance. You can also tweak the RSS settings for Windows.
The easiest way to test your VTEP network is with a vmkping and see if you have a fragmentation problem. Simply ping through all tunnel endpoints. If the ping works with a packet size greater than 8XXX, then you have no fragmentation.
vmkping ++netstack=vxlan <destination VTEP IP address> -d -s <packet size>
-d = don't fragment