vSphere DPM wakes up an ESXi host from a powered off state through WOL packets. WOL packets are broadcast traffic and require that the vCenter and ESXi hosts be in the same layer 2 networks. The vMotion VMkernel interface is used to send these WOL packets to other hosts, so vSphere DPM keeps at least one host powered on at all times. VMware recommends that you need to test the exit standby procedure for the host where DPM is going to be enabled. You need to make sure it can be successfully powered on through WOL.

The vSphere DPM algorithm does not frequently power servers on and off in response to transient load variations. Rather, it powers off a server only when it is very likely that it will stay powered off for some time. The history of the cluster workload is used to account this.

To minimize the power cycling frequency across all the hosts in the cluster, vSphere DPM cycles through all the comparable hosts enabled for vSphere DPM hosts when trying to find a power off candidate.

In conjunction with vSphere HA, if HA Admission Control is disabled, then failover constraints are not passed on to the DPM; thus, those constraints are not enforced. vSphere DPM does not care about failover requirements and puts the hosts in standby mode.

With cluster configuration settings, users can define the reserve capacity to always be available. Users can also define the time during which load history can be monitored before the power off decision is made. Power on is also triggered when not enough resources are available to power on a virtual machine, or when more spare capacity is required for vSphere HA.

You should enable DPM only after you are done with the testing of standby mode and wake on protocol configuration.

Priority ratings are based on the amount of overutilization or underutilization found in the DRS cluster, and the improvement that is expected from the intended host power state changes.

When you disable vSphere DPM, hosts are taken out of standby mode. Taking hosts out of standby mode ensures that when vSphere DPM is disabled, all the hosts are powered on and are ready to accommodate load increases.

Also, when you enable vSphere DPM, hosts in the DRS cluster inherit the power management automation level of the cluster by default.

VMware strongly recommends that you disable any host with a Last Time Exited Standby status of Never until you ensure that WOL is configured properly. You do not want vSphere DPM to power off a host for which wake has not been successfully tested.