I've been going back and forth with this issue for some time but honestly I have no idea if the vCenter telemetry is something to rely on. I'm experiencing rather high latency on the storage on my VMs, most of them idle, only vCenter and virtual firewall generate some IOPS, 5 are shut down, other 3 VMs are linux machines that idle for 99%, even though they can spike 100ms per IO. Today I have decided to migrate a VM storage to another server to find that higher disk utilization reduces the latency on the host, how that makes any sense? I'm using P420 in RAID 10 with 4x4TB 7k SAS HDDs.
Host latency:
https://preview.redd.it/cqvmy550ty1c1.png?width=986&format=png&auto=webp&s=f5823391eb6cd82cb9612b44aa2768087bf619e1
If it's constantly reading the same data it's stored in cache, which is significantly faster than reading from the actual drive. Because the latency is average and cache is very fast it lowers the latency shown in that graph.