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Assuming i have controller node, Network Node, Compute Node1 and Compute Node2. This Topology is similar to Manual Deployment from Ch5 to CH8 of the Openstack in Action with one addition of compute node.

I have created a Tenant Project1. Tenant Router is also created. I have created 3 VMs in Tenant Project1: VM1, VM2 and VM3. VM1 and VM2 are on compute Node1 and VM3 is on compute Node2.
All the Node are connected to Physical Switch with 2 Physical Routers connected to Physical Switch. 1 Router is used for all Nodes Public Interface and One router is used for Network Node external Network.

I have 2 question: how does VM1 to VM2 Traffic goes.
How does VM1 to VM3 Traffic goes. ( Is Tenant Router and Network Node involved here)

Also don't you think we should have 3rd interface on Compute node for VM to VM traffic as well as to Network node.