There is no local switching. For broadcast or multicast traffic, reflective relay provides packet replication to each VM locally on the server.
https://www.juniper.net/documentation/us/en/software/junos/multicast-l2/topics/topic-map/reflective-relay-switches.html https://www.cisco.com/c/en/us/td/docs/switches/datacenter/nexus9000/sw/7-x/layer2/configuration/guide/b_Cisco_Nexus_9000_Series_NX-OS_Layer_2_Switching_Configuration_Guide_7x/b_Cisco_Nexus_9000_Series_NX-OS_Layer_2_Switching_Configuration_Guide_7x_chapter_01011.html