If your goal is to achieve IP reachability between two sites and enable communication between endpoints, redistributing VTEP environment is usually sufficient. However, it depends on your network topology and the routing protocol you are using.
VTEPs are virtual tunnel endpoints used for encapsulating and decapsulating traffic over VXLAN tunnels. When VTEPs are redistributed, the remote site can learn the MAC addresses of the local endpoints and forward traffic appropriately. However, if the remote site has no knowledge of the IP subnets where the endpoints reside, it will not be able to route traffic to the local endpoints.
Redistributing all prefixes ensures that all IP subnets are advertised to the remote site, enabling it to route traffic to the local endpoints based on their IP addresses. This is particularly important if you have multiple subnets or if your endpoints are in different subnets.
In summary, if you only have a single subnet and you are using a routing protocol that supports VTEP redistribution, redistributing VTEP environment may be sufficient to achieve IP reachability between two sites. However, if you have multiple subnets or you are unsure about your routing protocol's capabilities, it is recommended to redistribute all prefixes to ensure that all IP subnets are advertised to the remote site.
