DirectPath places some limitations on VMs and so is used with caution. Generally, any VM that uses DirectPath becomes tied to an ESX host – vMotion and DRS will not work.
DirectPath must first be enabled in the ESX host's BIOS. As a consequence only certain systems support this. A PCI device can only be assigned to 1 VM at a time. That device cannot also be used by the host. A VM can have upto 2 directly connected devices.
The advantage that DirectPath gives is the ability for devices not directly supported by VMware to be attached to VMs. Also, by circumventing the virtualisation layer, greater performance can be achieved by a VM using a directly connected device. Typically DirectPath is used to assign high speed, dedicated NICs to high performance VMs. Other use cases include attaching locally attached USB devices to a VM.
See also Configuration Examples for DirectPath for more detail and examples.