EVC is short for Enhanced vMotion Compatibility. EVC allows you to migrate virtual machines between different generations of CPUs.

Because EVC allows you to migrate virtual machines between different generations of CPUs, with EVC you can mix older and newer server generations in the same cluster and be able to migrate virtual machines with vMotion between these hosts. This makes adding new hardware into your existing infrastructure easier and helps extend the value of your existing hosts. With EVC, full cluster upgrades can be achieved with no virtual machine downtime whatsoever. As you add new hosts to the cluster, you can migrate your virtual machines to the new hosts and retire the older hosts.

How to enable EVC in vCenter Server (1013111)

 

How does it work?

After EVC is enabled, all hosts in the cluster are configured to present the CPU features of a user-selected processor type to all virtual machines running in the cluster. This ensures CPU compatibility for vMotion even though the underlying hardware might be different from host to host. Identical CPU features are exposed to virtual machines regardless of which host they are running on, so that the virtual machines can migrate between any hosts in cluster.

ESXi 6.0 supports these EVC modes:

AMD Opteron Generation 1 (Rev. E)
AMD Opteron Generation 2 (Rev. F)
AMD Opteron Generation 3 (Greyhound)
AMD Opteron Generation 3 (no 3Dnow!) (Greyhound)
AMD Opteron Generation 4 (Bulldozer)
AMD Opteron “Piledriver” Generation
Intel “Merom” Generation (Intel Xeon Core 2)
Intel “Penryn” Generation (Intel Xeon 45nm Core2)
Intel “Nehalem” Generation (Intel Xeon Core i7)
Intel “Westmere” Generation (Intel Xeon 32nm Core i7)
Intel “Sandy Bridge” Generation
Intel “Ivy Bridge” Generation
Intel “Haswell” Generation

What happens when a host is removed from an EVC-enabled cluster?

When a host leaves an EVC-enabled cluster, it reverts to its normal behavior. New virtual machines started on that host can access all the features of the CPU, and are not limited by the EVC mode that was in effect while the host was in the EVC cluster. Note that virtual machines that were once able to migrate to the host might no longer be permitted to do so.

Vmware Compatibility Guide looks like this:

 

What is an ill-behaved application, and why does it affect EVC?

An ill-behaved application is one that does not use CPU-vendor-recommended methods of detecting features supported on a CPU. The recommended method is to run the CPUID instruction and look for the correct feature bits for the capabilities the application is expected to use. Unsupported methods used by ill-behaved applications include try-catch-fail or inferring the features present from the CPU version information. When unsupported methods are used, an application might detect features on a host in an EVC cluster that are being masked from the virtual machines. The CPUID-masking MSRs provided by CPU vendors do not disable the actual features. Therefore, an application can still use masked features. If a virtual machine running such an application is then migrated with vMotion to a host that does not physically support those features, the application might fail. VMware is not aware of any commercially-available ill-behaved applications.

For more information, see Detecting and Using CPU Features in Applications (1005763).

This is one of the articles which will explains more on EVC : Enhanced vMotion Compatibility (EVC) processor support (1003212)