alt Hacker NewsNested virtualization can be very handy in both the lab and in production. In the lab, you can try out a new hosting platform by running one atop the other. IE: Proxmox on VMWare, Hyper-V on KVM. This lets you try things out without needing fresh bare metal hardware.
In prod, let's say you run workloads in Firecracker VMs. You have plenty of headroom on your existing hardware. Nested virtualization would allow you to set up Firecracker hosts on your existing hardware.
Perhaps I'm misunderstanding, but wouldn't that case be covered by simply putting some vms under a vnet and others on another vnet and make them talk to each other? I can't also understand what you mean by "fresh bare metal hardware". In either case you don't need bare metal, being a top level vm or a nested one.