what happens to the packet before it reaches VM-B ?

An administrator has configured an NSX network as shown:

Both VM-A and VM-B use the same Distributed Router for their default gateway.
If VM-A sends a packet to VM-B,what happens to the packet before it reaches VM-B ?

A.
Distributed Router in Host-A receives the packet from VM-A and forwards it to Logical Switch 7775 in Host-B, via a VXLAN frame, which delivers it to VM-B

B.
Logical Switch 7321 in Host-A receives the packet inside a frame from VM-A and forwards it to Logical Switch 7775 in Host-B, via a VXLAN frame, which delivers
it to VM-B.

C.
Distributed Router in Host-A receives the packet from VM-A and forwards it to Logical Switch 7321 in Host-B, via a VXLAN frame, which delivers it to Logical
Switch 7775 before it is delivered to VM-B

D.
Logical Switch 7321 in Host-A receives the packet from VM-A and forwards it to the Distributed Router in Host-B, which passes it along to Logical Switch 7775 in
Host-B before it is delivered to VM-B.