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Source –  ESXi Configuration Guide

What is VMDirectPath I/O

VMDirectPath I/O is a VMware technology that can be used with I/O hardware to reduce the CPU impact of high-bandwidth throughput workload's by ‘‘bypassing’’ the hypervisor. It is supported for specific networking adapters in vSphere ESX 4, and it is experimental for specific storage adapters in vSphere ESX 4.

By allowing virtual machines to directly access the underlying hardware devices, VMDirectPath I/O device access enhances CPU efficiency in handling workload's that require constant and frequent access to I/O devices. VMDirectPath I/O for networking I/O devices is fully supported with the Intel 82598 10 Gigabit Ethernet Controller and Broadcom 57710 and 57711 10 Gigabit Ethernet Controller.

Prerequisites

1. To use VMDirectPath, verify that the host has Intel® Virtualization Technology for Directed I/O (VT-d) or AMD I/O Virtualization Technology (IOMMU) enabled in the BIOS. Refer to my earlier post.
2. Verify that the PCI devices are connected to the host and marked as available for passthrough.
3. Verify that the virtual machine is using hardware version 7.

Drawbacks

Use of the VMDirectPath disables many advanced VMware functions for the virtual machine, so be careful before you start using VMDirect Path. 
1. VMotion
2. High availability
3. Suspend and resume
4. Record and replay
5. Fault tolerance
6. Memory overcommitment and page sharing
7. Hot add/remove of virtual devices

8. No Snapshot backup

Few Good links about VMDirect Path I/O

1. A video is posted here by chad which will show you step by step instructions. All though this link is for Cisco Unified Computing (UCS) but still     it will help –  Link
2. VMware VMDirect Path I/O by Simon Long
3. To check for device compatibility please visit here
4. Configure VMDirect Path article 1010789
5. Troubleshooting VMDirect Path
6. http://communities.vmware.com/docs/DOC-11089
7. Scott Lowe blog about VMDirect Path

Without rebooting the server if you need to check whether the server has VT technology enabled in the BIOS you can use the following cmd

esxcfg-info|grep “HV Support”

Refer to kb article –  1011712

Now that is bad, we cannot copy and paste from the virtual machine remote console to the system in which the vSphere client is installed

KB article –  1026437 

VMware products have different kinds of disks. Some are compatible with ESX some are not. To make them compatible we have to use tools like converter OR vmkfstools

1) Zeroedthick (default) –  This is the default type of disk format. All the space is allocated at creation time. Any data remaining on the physical device is not erased during creation, but is zeroed out on demand at a later time on first write from the virtual machine. These types of disks are less secure because their disk blocks are not being cleared of previous data. The performance may not be great at first write because the disk needs to be zeroed before the data can be written.

2) Eagerzeroedthick –  Space required for the virtual disk is allocated at creation time.Since the data remaining on the physical device is zeroed out during creation, it takes longer time to create this disk. These disks are the most secure and, because the block has already been cleared of previous data, offer slightly better performance on the first write of data to a disk block.

3) Thick disks –  Space required for the virtual disk is allocated during creation. This type of formatting does not zero out any old data that might be present on this allocated space.

4) Thin Disk –  Space required for the virtual disk is not allocated during creation, but is supplied and zeroed out, on demand at a later time.

5) RDM –  Virtual compatibility mode for raw disk mapping

6) RDMP –  Physical compatibility mode (pass-through) for raw disk mapping

7) RAW –  Raw device

8) 2bgsparse disk –  2bgsparse divides a disk into multiple disks with a maximum size of 2 GB per disk. You can use disks in this format with other VMware products like Workstation, Server. You cannot use this type of disks in ESX server. You will have to import them with the help of converter OR vmkfstools 

9) monosparse – A monolithic sparse disk. You can use disks in this format with other VMware products.

10) monoflat – A monolithic flat disk. You can use disks in this format with other VMware products.

The above information is from VMware's kb article 1022242