You would see many articles\blog on the title but I am putting one simplified definition for my readers. Folks who worked on NSX-v might have heard about the DLR and Edges, right? let's compare this DLR\Edge with Tier0\Tier1. DLR - it is used to connect the logical switch with ESG to exit and connect with outer world, if configured so. ESG - It act as the only mean for internal packet to get out and communicate with external\outer world. It means, VM's traffic goes to DLR (if DLR is default gateway for that VM) and then DLR send the packet to ESG (If there is trunk port configured between DLR and ESG and packet is destined to go out). Below is the reference picture. Picture taken from blog.vmware.com Now Let's see how Tier0 and Tier1 routers are similar or different than DLR and Edge. In Short, Tier1 act as DLR that is it does east-west routing and Tier0 act as ESG that is it does North-South routing. Below picture will clear all doubts. Taken from docs.vmware.