As of Red Hat Enterprise Linux 7.5, nested virtualization is available as a Technology Preview for KVM guest virtual machines. With this feature, a guest virtual machine (also referred to as level 1 or L1) that runs on a physical host (level 0 or L0) can act as a hypervisor, and create its own guest virtual machines (L2).
Nested virtualization is useful in a variety of scenarios, such as debugging hypervisors in a constrained environment and testing larger virtual deployments on a limited amount of physical resources. However, note that nested virtualization is not supported or recommended in production user environments, and is primarily intended for development and testing.
Nested virtualization relies on host virtualization extensions to function, and it should not be confused with running guests in a virtual environment using the QEMU Tiny Code Generator (TCG) emulation, which is not supported in Red Hat Enterprise Linux.