The translation lookaside buffer is a high-speed memory page cache for virtual to physical address translation. It follows the local principle to avoid time consuming lookups for recently used pages. But what happened in a virtual environment (e.g. kvm, xen, vmware)? Host mappings are not coherent to the guest and vice versa. Each guest has it's own address space, the mapping table cannot be re-used in another guest (or host). Therefore first generation VMs like Intel Core 2 (VMX) flush the TLB on each vm-enter (resume) and vm-exit. But flushing the TLB is a show-stopper, it is one of the most critical components in a modern CPU. The relevant code for Linux is located under arch/x86/kvm/x86.c:vcpu_enter_guest().
But Intel engineers started to think about that. Intel Nehalem TLB entries have changed by introducing a Virtual Processor ID. So each TLB entry is tagged with this ID. VPID's are not specified by the CPU, they are allocated by the hypervisor whereas the host VPID is 0. Starting with Intel Nehalem the TLB must not be flushed. When a process tries to access a mapping where the actual VPID does not match with the TLB entry VPID a standard TLB miss occur. Some Intel numbers show that the latency performance gain is 40% for a VM round trip transition compared to Meron, a Intel Core 2.
Current Kernel (at least e56c57d0d3fdb from net-next) provides no VIDS for nested VM's. This is no limitation of Intel's concept (arch/x86/kvm/vmx.c:prepare_vmcs02()). It is rather a proof that nested VMs are not in wide-use and nobody seems to miss that behavior.