If you want the technical details, try Nicira's website. They have a 3 minute Nicira intro video: http://bcove.me/lydym25p (skip to 1:10 for the meat). Or, just imagine if you had VMs in multiple racks within potentially multiple data centers and, on the fly, you could use an API to provision a private 10.0.0.0 subnet so that the machines could talk to each other as if they were directly connected to the same physical network switch. In a nutshell, virtualized TCP/IP tunneled over TCP/IP.