> We are thinking about deploying the firewall in order to limit traffic to
> certain virtual machines.

AFAIK there is no traffic shaping functionality.

> One question I have is if enabling the firewall at the datacenter level is a
> requirement 

Yes, that is the global firewall on/off flag.

>or is that only used to limit traffic to the web GUI etc.
> 
> For example can we just enable the firewall on the host and/or the virtual
> machine level and not enable it in the datacenter tab?

No, that flag is to enable the firewall on all host and the virtual machine
level.

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