When deploying VMware Cloud Foundation (VCF) one can choose between configuring NSX-T Host Overlay using a static IP Pool or DHCP. This is specified in the vcf-ems-deployment-parameter spreadsheet which is used by the Cloud Builder appliance to bring up the Management Workload Domain as you can see in the following images:
If No is chosen, it is crucial that you provide a highly available DHCP server in your NSX-T Host Overlay VLAN to provide IP addresses for the TEPs. In the past I have had several customers who have either broken their DHCP server or their DHCP Relay/DHCP Helper so that the TEPs were unable to renew their IP configuration. This will make NSX-T configure APIPA (Automatic Private IP Addressing) addresses on these interfaces. The IP address range for APIPA is 169.254.0.1-169.254.255.254, with the subnet mask of 255.255.0.0.
The following image shows this issue in the NSX-T GUI:
You can also see this in the vSphere Client by checking the IP configuration on vmk10 and vmk11.
The impact is that the Geneve tunnels will be down and nothing on Overlay Segments will be able to communicate. This is critical, so keep you DHCP servers up or migrate to using a Static IP Pool.
To renew the DHCP lease on vmk10 and vmk11 you can run the following commands from ESXi Shell:
esxcli network ip interface set -e false -i vmk10 ; esxcli network ip interface set -e true -i vmk10
esxcli network ip interface set -e false -i vmk11 ; esxcli network ip interface set -e true -i vmk11
Most customers choose to configure NSX-T Host Overlay using DHCP because that used to be the only option. Using a static IP Pool is also still not compatible with some deployment topologies of VMware Cloud Foundation, such as multiple availability zones (stretched clusters) or clusters which span Layer 3 domains.
It is possible to migrate to Static IP pool from DHCP following this KB:
Migrate to DHCP from Static post deployment is not possible.