ESX Server 3 Configuration Guide : Raw Device Mapping : Raw Device Mapping Characteristics : Virtual Compatibility Mode Compared to Physical Compatibility Mode

Virtual Compatibility Mode Compared to Physical Compatibility Mode
Virtual mode for an RDM specifies full virtualization of the mapped device. It appears to the guest operating system exactly the same as a virtual disk file in a VMFS volume. The real hardware characteristics are hidden. Virtual mode allows customers using raw disks to realize the benefits of VMFS such as advanced file locking for data protection and snapshots for streamlining development processes. Virtual mode is also more portable across storage hardware than physical mode, presenting the same behavior as a virtual disk file.
Physical mode for the RDM specifies minimal SCSI virtualization of the mapped device, allowing the greatest flexibility for SAN management software. In physical mode, the VMkernel passes all SCSI commands to the device, with one exception: the REPORT LUNs command is virtualized, so that the VMkernel can isolate the LUN for the owning virtual machine. Otherwise, all physical characteristics of the underlying hardware are exposed. Physical mode is useful to run SAN management agents or other SCSI target based software in the virtual machine. Physical mode also allows virtual-to-physical clustering for cost-effective high availability.
Figure 8-4. Virtual And Physical Compatibility Modes