Here's a report on the state of KVM Nested Virtualization for Linux in dealing with multiple layers of virtualization.
In this blog post
is an overview of the KVM Nested Virtualization state, which basically comes down to virtualization within an already virtualized instance using the Kernel-based Virtual Machine. This is done by passing access of the host's AMD/Intel virtualization extensions to the virtualized guest instances.
Daniele Pavia's conclusions regarding the current state of KVM Nested Virtualization comes down to: "KVM nested virtualization is basically working, yet not stable enough to be brought under the spotlight. I encountered even more issues while trying to run more than one vmx-enabled L1 guest. Yet, KVM on KVM nesting worked properly and, given the constant development and the minimal overhead, it really is promising. Concerning my previously set target, I'll recompile the VDSM and try to convert my fedora server into an oVirt node, a thing which I'll eventually attempt as soon as I'll find more spare time."