if you encounter the message “VMWare tools installed but not managed” on your VSphere it’s probably because you’ve installed the open-vm-tools on your Linux OS, or simply they were already installed on your OS. And that’s OK. There is no problem in this case.

It simply means VMWare doesn’t manage vm ware tools updates on your OS, it’s you that have the responsibility with some commands like yum update or dns update, …

Because as explained here by VMWare :

VMware Tar Tool for Linux virtual machine is feature-frozen at version 10.3.10, so the tar tools (linux.iso) included in Workstation Player is 10.3.10 and will not be updated. Due to this change, the Install/Update/Reinstall VMware Tools menu is disabled for the following Linux virtual machines:

  • Modern Linux distributions not officially supported by tar tools.
    • Red Hat Enterprise Linux 8 and later releases.
    • CentOS 8 and later releases.
    • Oracle Linux 8 and later releases.
    • SUSE Linux Enterprise 15 and later releases.
  • Linux kernel version is 4.0 or later, and the version of the installed Open VM Tools is 10.0.0 or later.
  • Linux kernel version is 3.10 or later, and the version of the installed Open VM Tools is 10.3.0 or later.

Consequently “the Install/Update/Reinstall VMware Tools menu” is disabled in your vSphere for recent Linux distros. Because VMWare encourage you to install open-vm-tools as explained here:

Bundling open-vm-tools with Linux OS releases reduces virtual machine downtime because all updates to the open-vm-tools suite are included with the OS maintenance patches and updates. You do not have to maintain separate maintenance cycles for open-vm-tools suite updates. This is also applicable for VMware guest operating system drivers.

Other source about this subject:

Another VMWare source

Another VMWare source