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The NSX Firewall and the VM-Series firewall work in concert to enforce security; each provides a set of traffic management rules that are applied to the traffic on each ESXi host. The first set of rules is defined on the NSX Firewall; these rules determine traffic from which guests in the cluster are steered to the VM-Series firewall. The second set of rules (Palo Alto Networks next-generation firewall rules) is defined on Panorama and pushed to the VM-Series firewalls. These are security enforcement rules for the traffic that is steered to the Palo Alto Networks NGFW service. These rules determine how the VM-Series firewall must process—that is allow, deny, inspect, and constrain—the application for enabling it safely on your network.


Unlike the other versions of the VM-Series firewall, because both virtual wire interfaces (and subinterfaces) belong to the same zone, the NSX edition uses dynamic address groups as the traffic segmentation mechanism. A security policy rule on the VM-Series NSX edition firewall must have the same source and destination zone, therefore to implement different treatment of traffic, you use dynamic address groups as source or destination objects in security policy rules.
Dynamic address groups offer a way to automate the process of referencing source and/or destination addresses within security policies because IP addresses are constantly changing in a data center environment. Unlike static address objects that must be manually updated in configuration and committed whenever there is an address change (addition, deletion, or move), dynamic address groups automatically adapt to changes.
All security groups defined on the NSX Manager are automatically provided as updates to Panorama using the NetX API management plane integration and can be used as filter criteria to create dynamic address groups; the firewall uses the name of the security group (which is a tag) to filter for all the members that belong to a security group. In a ESXi cluster with multiple customers or tenants, the ability to filter security groups for a specific zone (service profile on the NSX Manager) allows you to enforce policy when you have overlapping IP addresses across different security groups in your virtual environment.
If, for example, you have a multi-tier architecture for web applications, on the NSX Manager you create three security groups for the WebFrontEnd servers, Application servers and the Database servers. The NSX Manager updates Panorama with the service profile ID, name of the security group, and the IP address of the guests that are included in each security group.

On Panorama, you can then create three dynamic address groups to match objects that are tagged as Database, Application and WebFrontEnd. Then, in security policy you can use the dynamic address groups as source or destination objects, define the applications that are permitted to traverse these servers, and push the rules to the VM-Series firewalls.
Each time a guest is added or modified in the ESXi cluster or a security group is updated or created, the NSX Manager uses the PAN-OS REST-based XML API to update Panorama with the IP address, and the security group to which the guest belongs. To trace the flow of information, see
Dynamic Address Groups—Information Relay from NSX Manager to Panorama .

When Panorama receives the API notification, it verifies/updates the IP address of each guest and the security group and the service profile to which that guest belongs. Then, Panorama pushes these real-time updates to all the firewalls that are included in the device group and notifies device groups in the service manager configuration on Panorama.
On each firewall, all policy rules that reference these dynamic address groups are updated at runtime. Because the firewall matches on the security group tag to determine the members of a dynamic address group, you do not need to modify or update the policy when you make changes in the virtual environment. The firewall matches the tags to find the current members of each dynamic address group and applies the security policy to the source/destination IP address that are included in the group.