I am not sure but I think VxLAN is used for communication with two virtual machines which belong to one subnet.
To achieve this OVS maintains VxLAN information and it worked as over lay network. This is know an overlay network because it uses IP layer of under lay network.
When one VM with IP 192.168.10.x residing at one physical machine wants to talk to another VM of same network 192.168.10.x series which is residing in another physical machine use the VxLAN tunneling.
VM1 forms IP packet (MAC + IP + TCP/UDP + Data) and send packet to physical machine. Based on target VM IP address it has mapping of VNI (Vx LAN Network Identifier) and add the header and encapsulate the packet in under lay network IP packet.
Once target physical machine receives this packet based on the VNI it comes to know which VM it suppose to deliver the packet.
This is how VxLAN works. I tried my best to explain VxLAN concept though I am not expert in networking.