In tunnel mode does server to server traffic go through uplinks?

[Tyson]

I'm currently in a test environment learning what I can of the Flex-10 switches. When I discovered that adding a VLAN to a blade in VLAN Mapping mode requires downing the blade I looked for ways around this. In our environment we add VLANs to our ESX cluster all the time. Having to down our cluster one blade at a time just to add a VLAN is awful.

Anyways I figured out I can get around this (or so it appears) by running in tunnel mode. My question is how smart is the Flex-10 switch in this mode. If Blade 1 sends traffic to Blade 2 does the traffic stay in the Flex-10 switch or does the Flex-10 switch just blindly forward traffic from Blade 1 to the uplink switch and depend on that switch to direct the traffic back to the Flex-10 switch for delivery to Blade 2?

Thanks!

PS: I hope HP is working on allowing us to add VLANs to blades in Mapped Mode without downing the blade. Coming from a Cisco environment this is a rude shock and to be honest we probably would not have bought the hardware if this had appeared in the documentation we saw during research.