From a Nutanix exam perspective, this question is really testing whether the administrator understands the control point that actually governs the behavior shown in the scenario. The correct response is B, meaning “On the AHV host's physical network interfaces”. MTU planning matters because encapsulation adds overhead. When overlay, Geneve, VXLAN, or IPSec is present, a path that looks healthy at 1500 bytes can still fragment or drop larger frames unless the underlay and endpoints are sized correctly. This is a Flow policy design question, so categories, secured entities, rule direction, policy mode, and policy precedence matter more than simple IP connectivity assumptions. By contrast, A does not fit because it targets a different layer of the Nutanix networking and security stack than the one causing the outcome here. C does not fit because it targets a different layer of the Nutanix networking and security stack than the one causing the outcome here. The key takeaway is that Flow is intentionally modular. Networking objects determine reachability, security objects determine permission, and lifecycle steps determine supportability. Mixing those layers usually produces the distractor answers. A strong exam habit is to ask which Nutanix construct would have to.