In a NSX environment, most ESXi transport nodes in the same cluster exhibit the following symptoms:
VMware NSX
This issue occurs because one specific host in the cluster is in an abnormal state (e.g., Not Responding in vCenter or Disconnected in NSX).
In an NSX transport zone, transport nodes attempt to form a mesh of BFD tunnels with all other active nodes. If a single host (e.g., esx01) becomes disconnected or unresponsive, all other healthy hosts in the same cluster will lose their tunnel connections to that specific host. Consequently, those healthy hosts will report a Degraded status because their required tunnel mesh is incomplete, even though their physical networking is functional.
To resolve the degraded status, identify and fix the "source" host that is disconnected.
NSX Host Node Tunnel Status is 'Degraded': https://knowledge.broadcom.com/external/article/409965
Troubleshooting NSX TEP/BFD Tunnels between ESXi hosts and Edges: https://knowledge.broadcom.com/external/article/379112