Physical and Virtual RDMs Compatibility

An RDM is a special mapping file in a VMFS volume that manages metadata for its mapped device. The mapping file is presented to the management software as an ordinary disk file, available for the usual file-system operations. To the virtual machine, the storage virtualization layer presents the mapped device as a virtual SCSI device.

 RDM has two compatibility modes:

• Physical compatibility mode 
• Virtual compatibility mode

Physical Compatibility Mode

• Physical mode specifies minimal SCSI virtualization of the mapped device, allowing the greatest flexibility for SAN management software. 
• The VMkernel passes all SCSI commands to the device, with one exception - The REPORT LUNs command is virtualized, so that the VMkernel can isolate the LUN to the owning virtual machine. Otherwise, all physical characteristics of the underlying hardware are exposed. 
•  Note: Other VMkernel modules have the ability to intercept I/O to perform relevant operations such as NMP, Drivers, etc. For a graphical representation of the ESXi storage stack, see the VMkernel and Storage section of the vSphere Storage Guide for ESXi 5.0, ESXi 5.5 and ESXi 6.0. 
• Physical mode is useful while running SAN management agents or other SCSI target-based software in the virtual machine. 
• Physical mode also allows virtual-to-physical clustering for cost-effective high availability. 
• Virtual Machine Snapshots are not available when the RDM is used in physical compatibility mode. 
• You can use this mode for Physical-to-virtual clustering and cluster-across-boxes. 
• VMFS5 supports greater than 2 TB disk size for RDMs in physical compatibility mode only. These restrictions apply: 
•  You cannot relocate larger than 2 TB RDMs to datastores other than VMFS5. 
• You cannot convert larger than 2 TB RDMs to virtual disks, or perform other operations that involve RDM to virtual disk conversion. Such operations include cloning.

Physical Compatibility Mode

• Virtual mode specifies full virtualization of the mapped device. 
• VMkernel sends only READ and WRITE to the mapped device. The mapped device appears to the guest operating system exactly the same as a virtual disk file in a VMFS volume.
• The real hardware characteristics are hidden. 
• If you are using a raw disk in virtual mode, you can realize the benefits of VMFS, such as advanced file locking for data protection and snapshots for streamlining development processes. 
• Virtual mode is more portable across storage hardware than physical mode, presenting the same behavior as a virtual disk file. 
• You can use this mode for both Cluster-in-a-box and cluster-across-boxes.

References 

https://kb.vmware.com/selfservice/microsites/search.do?language=en_US&cmd=displayKC&externalId=2009226