I use vxlan on top of wireguard in my hobby set up. Probably wouldn't recommend it for an actual production use-case. But that is more or less because of how my homelab is setup (Hetzner -> Home about 20ms latency roundtrip).

I considered dropping my root wireguard and setting up just vxlan and flannel, but as I need NAT hole punching I kind of need the wireguard root so that is why i ended up with it.

Going Wireguard inside the vxlan (flannel) in my case, would likely be overkill, unless I wanted my traffic between nodes between regions to be separated from other peers on the network, not sure where that would be useful. It is an easy way of blocking out a peer however, but that could just as well be solved on the "root" wireguard node.

There might be some MTU things that would be messed up going nested wireguard networks.