Notify Switches Option in VMware vSphere vSwitch

The Notify Switches configuration is a bit mystifying at first. Notify the switches about what, exactly? By default, it’s set to “Yes,” and as we cover here, that’s almost always a good thing.

Remember that all of your upstream physical switches have a MAC address table that they use to map ports to MAC addresses. This avoids the need to flood their ports—which means sending frames to all ports except the port they arrived on (which is the required action when a frame’s destination MAC address doesn’t appear in the switch’s MAC address table).

But what happens when one of your uplinks in a vSwitch fails and all of the VMs begin using a new uplink? The upstream physical switch would have no idea which port the VM is now using and would have to resort to flooding the ports or wait for the VM to send some traffic so it can re-learn the new port. Instead, the Notify Switches option speeds things along by sending Reverse Address Resolution Protocol (RARP) frames to the upstream physical switch on behalf of the VM or VMs so that upstream switch updates its MAC address table. This is all done before frames start arriving from the newly vMotioned VM, the newly powered-on VM, or from the VMs that are behind the uplink port that failed and was replaced.

These RARP announcements are just a fancy way of saying that the ESXi host will send out a special update letting the upstream physical switch know that the MAC address is now on a new uplink so that the switch will update its MAC address table before actually needing to send frames to that MAC address. It’s sort of like ESXi is shouting to the upstream physical switch and saying, “Hey! This VM is over here now!”

Credit for this info goes to "Networking for VMware Administrators"