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It just means that instances are implemented by virtual machines in a vsphere cluster. Why would you want that? Perhaps you have a vsphere installation and want to integrate it with OpenStack services such as Magnum (managing Kubernetes clusters), Sahara (Big Data), Trove (database servers) etc. Or you plan to write applications using the OpenStack API. Or you want to gradually move from Vmware to OpenStack. A few use cases by Vmware itself: