Nested virtualization on Proxmox 7.4
If you would like to run virtual machine inside another virtual machine, then you need to have CPU with nested virtualization feature and this feature needs to be enabled. Even if enabled:
cat /sys/module/kvm_intel/parameters/nested # Intel
cat /sys/module/kvm_amd/parameters/nested # AMD
you might still have error on enabling virtualization inside virtual machine:
sudo modprobe kvm_intel
modprobe: ERROR: could not insert 'kvm_intel': Operation not supported
Still, even with “KVM hardware virtualization” set to Yes on VM Options pane in Proxmox UI, you may have trouble to get it to work. In case of Intel Xeon Gold 5412U there are no additional CPU flags available to set from Proxmox UI.
You need to select CPU type as “host” either from UI or inside VM configuration file (/etc/pve/qemu-server/XXX.conf). With this setting you get nearly all the features available and possible to pass from the host to guests.