Nowadays "embedded system" is generally refered to system that involve microcontroller/microprocessor.
However, it is not totally has no connection with VLSI.
As we know, microcontroller is the core of embedded system, and whats inside it is VLSI design. I've come across to some postgraduate course on embedded system, their syllabus includes arcitecture, design of microcontroller. Anyway, only small amount of people is working on design of microcontroller, most of the rest of us just dont care to bother about it.