Some virtual machines that you create on ESXi 5.0 hosts are supported on hosts running earlier versions of ESX/ESXi software.

If you create a virtual machine on an ESXi 5.0 host and select the typical path, the virtual hardware version is version 8. Virtual machines with virtual hardware version 8 are not supported on hosts running versions of ESX/ESXi software earlier than ESXi 5.0. When you create virtual machines on ESXi 5.0 hosts, to ensure that your virtual machines can run on version 4.x ESX and ESXi hosts, select the custom path and select virtual hardware version 7. Virtual machines that have virtual hardware version 7 work properly on ESX/ESXi 4.x hosts and ESXi 5.0 hosts, and you can use vMotion to migrate virtual hardware version 7 virtual machines between between ESX/ESXi 4.x hosts and ESXi 5.0 hosts.

Because paravirtualization (VMI) is not supported on ESXi 5.0, you cannot move VMI-enabled virtual machines from an ESX 3.x or ESX 4.x/ESXi 4.x host to an ESXi 5.0 host when the virtual machines are powered on. When the VMI-enabled virtual machines are powered off, you can move them from ESX 3.x or ESX 4.x/ESXi 4.x host to ESXi 5.0 hosts and then remove VMI devices from the virtual machines before powering on the virtual machines.