So you ping 10.3.4.16 and your host automatically 'knows' to just send it to 17.16.4.16 where lying in wait, the receiving host simply forwards it to 10.3.4.16. I like it.
This is a vexing problem for containers and even VM networking. If they are in a NAT you need to create a mesh of tunnels across hosts, or you create a flat network so they are all on the same subnet. But you can't do this for containers on the cloud with a single IP and limited control of the networking layer.
Current solutions include L2 overlays, L3 overlays, a big mishmash of GRE and other type of tunnels, or VXLAN multicast unavailable in most cloud networks, or proprietary unicast implementations. It's a big hassle.
Ubuntu have taken a simple approach, no per node database to maintain state and uses commonly used networking tools. And more importantly it seems fast. And it's here and now. That 6gbps suggests this does not compromise performance like a lot of other solutions tend to do. It won't solve all multi-host container networking use cases but will address many.