VXLAN has two main modes of operation Multicast mode and Unicast mode. As their names suggest unicast mode relies only on unicast connectivity and multicast mode relies on multicasts to work. But most of the operator use unicast mode as multicast requires lot of planning and designing in DC network with enablement of IGMP.

VXLAN Operation – Multicast (Want to know more about Multicast)
In multicast deployment scenarios you do not need to have PIM configured however existing network element must capable of performing the role of an IGMP querier for the VXLAN. IGMP is layer 3 protocol which is used to establish a membership with in multicast domain. By default switch treats all multicast traffic as broadcast traffic which slow down the performance of network. To curb this issue, IGMP snooping has to be enabled on switch. Once snooping is enabled switch sniffs the IGMP join, leave and query messages between multicast routers and switches. The responsibility of the Querier is to send out IGMP group membership queries on a timed interval, to retrieve IGMP membership reports from active members, and to allow updating of the group membership tables.

When VXLAN is deployed in multicast mode the outgoing multicast packet has VNI and the IP destination multicast group. Multicast deployment methods available with one to one mapping and one to many mapping.