
From ESXi perspective by ESXi and from the switch perspective by load-balancing set on the switch side. Trafic can be load-balanced from both sides of the link (virtual link channel, port-channel, etc.).Single VM can, in theory, handle higher traffic then single physical NIC because of load-balancing algorithm.
This improves failover in case of link failure and also helps when link status (up/down) do not work well. VMware's LACP is sending LACPDUs every 30 seconds but it can be reconfigured to fast mode when LACPDUs are exchanged every 1 second.
One of the main LACP advantages is continuous heartbeat between two sides of the link (ESXi physical NIC port and switch port). Traffic is load-balanced across links in the channel from ESXi perspective (egress traffic) but only at VM NIC granularity and returning traffic (ingress traffic) is forwarded by the same link as egress traffic. Single VM cannot handle traffic higher than the bandwidth of single physical NIC. Note: Beacon probing requires at least 3 physical NICs. Fully independent on upstream physical switches. Option 1: Switch Independent Teaming ( LBT - Load Based Teaming) When you have VDS then I would have another assumption, that you are already considering LBT as it is the best choice for switch independent teaming algorithms available on VDS. LACP is the capability of VMware Distributed Virtual Switch (VDS), therefore, I would assume you are on vSphere Enterprise Plus license and having VDS. What we are doing is the comparison of switch independent teaming and LACP. If you are not familiar with basic VMware vSphere networking read my previous blog post " Back to the basics - VMware vSphere networking" before continuing. VMware LBT (load based teaming) is advanced switch independent teaming available on VMware DVS which pin each VM vNIC to particular physical uplink in roud robin fasion but if the network traffic of particular physical NIC is higher then 75% of total bandwidth over 30 seconds it will initiate rebalancing across available physical uplinks (physical NICs of ESXi host) to avoid network congestion on particular uplink. I assume you (my reader) is familiar with LACP but do you know what LBT is? If not, here is the short explanation. Instead of the simple answer, I will do the comparison of LBT and LACP. Unfortunately, the answer always depends on specific factors (requirements and constraints) for the particular environment so do not expect the short answer.
I have answered this question lot of times during the last couple of years, thus I have finally decided to write a blog post on this topic.