Virtual networking

The z/VM® guests use a Virtual Switch (VSWITCH) configured LAN for guest-to-guest communication.

A 10 GbE OSA-Express3 is connected to the VSWITCH and the guests attached to the VSWITCH reside in the same LAN as the 10GbE OSA Express® card is attached to. This allows the configuration of guest IP addresses from the same network that are used by the OSA Express card. As a virtual networking solution, the VWITCH provides good performance and is the recommended method for internal and external z/VM network connectivity.

See also Linux™ on System z® network connection types presentation:
https://www.vm.ibm.com/education/lvc/lvc1109c.pdf
For more information about z/VM virtual networking and the VSWITCH you can start here:
http://www.vm.ibm.com/virtualnetwork