VXLAN is a network virtualization technology that leverages existing Layer
3 infrastructures to create tenant overlay networks. VXLAN addresses the requirements of a
multi-tenant data center network infrastructure by:
- Increasing virtual network scalability to 16 million
instances. This allows for tenant VLAN isolation whereby
multiple tenants can manage their own VLAN/VMAN and MAC address spaces.
- Adding an encapsulation that effectively hides VM MAC addresses from
the physical network that results in physical networking devices to have smaller MAC and
IP table sizes.
- Allowing for Layer 2 adjacency across IP networks by which DC
network operators protect their investment in their current infranstructure. Additionally
operators can distribute traffic loads across links efficiently using Layer 3 ECMP.