It depends :)
Assuming you are using VSAN OSA?
With three hosts, you have 2 copies of your VM objects and a witness object, distributed across those three hosts.
If you lose one host, you still have either 2 copies of your data OR 1 copy + witness object, your workloads keep on running, but you cannot create any new objects/VMs in that cluster.
Now, to the "it depends" part:
- In case of only one capacity drive in your VSAN Disk Groups, and this one drive fails, all VMs will be affected and stop I/O.
- If you have more than one capacity disk per host in your VSAN Disk Groups (and not using Deduplication), it depends on which additional disk fails, because there might be a component of VM 1 on it, but not VM 2. Then VM 1 will stop working (I/O will be halted), while VM 2 still has enough components (more than 50%).
- And in case of a cache drive failure (assuming you use VSAN OSA), it will affect the whole disk group anyways, so it doesn't matter if you have multiple capacity drives.