So, this is a VPN implemented as a linux kernel module that's somehow not open source?
Yes, that's correct.
Nice post!
Can this be used with only ngnix/varnish or some other server end software can also be used.
This is independent of nginx/Varnish. Actually, vCider gives you a virtual network and you can run any traffic you want over it, even non-IP protocols, since it's a virtual network switch.