For #1, Assuming that you are suggesting to run appium in different machine means that run a appium server in a VM other than sibling VMs. If that said, then this is not a feasible and not resource friendly solution since this requires separate VM instance apart from sibling VMs for each run.
In simple words, say 2 sibling VMs are used to run appium tests, then we need a total of 3 VMs for each run [i.e. 2 sibling VMs + 1 VM for running appium server]. This increases totally resources overhead while running appium tests in bulk mode with multiple hosts.
For #2, actually appium server is port is unique in both the sibling VMs.
@latchookarthi Please correct me if you meant something else.
I want to understand why appium is failing even though appium servers are running in two distinct sibling VMs running in a same host.