I'm running three virtual servers on a single physical server (using Parallels Bare Metal for virtualization and one Xserve is the physical server).
I'm wondering how the traffic travels between the virtual servers, does it go through some kind of an internal mechanism so the traffic never leaves the physical server or does it go through the router and back into the physical server?
Thanks so much for any help.
I don't know Parallels specifically but usually with virtualization there is one (or several) virtual switch where the virtual machine's NICs connect to. So the short answer to your question is the VMs will communicate with each other without going out to the router and back.
But the longer answer is that it depends on your layer 3 network configuration. You can actually build fully routed networks within a single server.