A vSphere operator can only configure up to two virtual CPUs when deploying a new virtual machine (VM). What is the cause of this situation?

VMs support significantly more than 2 vCPUs; the maximum depends on the ESXi version and VM hardware version, often hundreds of vCPUs.

While DRS manages resource allocation across a cluster, its operational mode does not directly restrict the maximum number of vCPUs configurable for an individual VM.

The number of virtual CPUs that can be assigned to a VM cannot exceed the number of physical CPU cores available on the underlying ESXi host where the VM is being provisioned. If the selected ESXi host has only 2 physical CPU cores, the VM creation wizard will impose this maximum vCPU limit.

Selecting "ESXi6.5 and later" compatibility typically supports a high number of vCPUs, far exceeding two, and would likely enable more vCPUs, not restrict them.