There was a question this week internally and I really had to start digging, as I have not looked at this in a loooong time. What does “Performance degradation VMs tolerate” do? And does this feature require admission control to be enabled or not?

I had to test this, as I barely ever play around with the HA settings these days. But, let’s first describe what this feature is for. I think the UI explains it fairly decently, but here’s my explanation from the vSphere Clustering Deep Dive:
This feature allows you to specify the performance degradation you are willing to incur if a failure happens. It is set to 100% by default, but it is our recommendation to consider changed the value. You can for instance change this to 25% or 50.
Now, the requirement for this feature to work is to have DRS enables, but Admission Control does not need to be enabled! A lot of people are under the impression that it requires Admission Control in order to take “an X number of failures” into account, but it does not. It actually does not use what is specified for Admission Control. It takes a single failure into account when it comes to this feature, and then uses DRS to do the calculations if powered on VMs will get the same amount of resources allocated after a failure. If the answer is no, or performance degradation is higher than the percentage specified, a warning is triggered. You will still be able to power on new VMs, but the warning will not go away unless the resource usage changes, or you add more resources to the cluster.
