what is the linux file location where the cloud-init user-data is passed to?

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what is the linux file location where the cloud-init user-data is passed to? And how does cloud init use that, is it passed as kernel parameter for proc commandline? Can explain in atleast level 2?

How cloudinit works on bare eSXI?

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According to the documentation for the AltCloud data source, which includes vSphere:

For VMWare’s vSphere the userdata is injected into the VM as an ISO via the cdrom. This can be done using the vSphere dashboard by connecting an ISO image to the CD/DVD drive.

So cloud-init will retrieve your user-data from an attached ISO image (from a file named user-data.txt).

When cloud-init runs, it will typically populate /var/lib/cloud-init/instance with any information retrieved from the cloud provider, so you should find a copy of the user data in that directory.