Setup would be this:
Level 0: Hypervisor.
Level 1: Host Server 2016 named "Host", and the first guest with Server 2016 named "Guest-Level-1" and "Set-VMProcessor -VMName Name-ExposeVirtualizationExtensions $true" activated for this level 1 guest.
Level 2: No which OS are supported as Level-2 virtual machines within "Guest-Level-1"? Is this limited to Server 2016 or Windows 10 (at least 1607) as well?
Aside from supported: Any experience whether those Level 2 guests can be Server 2012 (R2) or Windows 8 (.1) or even Windows 7?