vSphere Distributed Switch (VDS) spans multiple vSphere hosts and aggregates networking to a centralized datacenter-wide level, simplifying overall network management (rather than managing switches on individual host level) allowing e.g. the port state/setting to follow the vm during a vMotion (Network vMotion) and facilitates various other advanced networking functions - including 3rd party virtual switch integration.
Each vCenter Server instance can support up to 128 VDSs, each VDS can manage up to 2000 hosts.