Meaning that your virtual machine appears to your gateway as if it was a physical machine, sibling to your host. The thing to remember here is that even though the internal/external switch is virtual, it behaves just as your ordinary MAC switch would - just switching Ethernet frames around based on MAC addresses. As soon as you create your first virtual switch, Windows installs virtual adapter drivers and 'transparently' re-connects the Hyper-V host to the gateway through a virtualized network interface which enables virtual switching. If it is otherwise connected to an external or internal virtual switch, both the host and the VM use one virtual port each on that switch, which in turn connects to your very real gateway as mediated by the physical network interface. A Hyper-V virtual machine shares the immediate (local) network with the Hyper-V host, unless it is connected to a private virtual switch in which case there is no reaching from the host to VM or the other way around.
