VXLAN
also: Virtual Extensible LAN
VXLAN (Virtual Extensible LAN) is a network virtualization technology that encapsulates Layer 2 Ethernet frames within Layer 4 UDP packets, allowing virtual networks to span across physical networks and data centers.
VXLAN extends the scalability of traditional VLANs by encapsulating Ethernet frames inside UDP datagrams and tunneling them over IP networks. This allows you to create isolated virtual Layer 2 networks that can span across geographically distributed physical infrastructure, overcoming the 4094-VLAN limit of traditional VLANs.
The technology assigns a 24-bit VXLAN Network Identifier (VNI) to each virtual network segment, enabling up to 16 million unique networks. Each VM or container connected to a VXLAN receives an IP address in the virtual network, while the physical underlay network carries encapsulated traffic between VXLAN Tunnel Endpoints (VTEPs).
Example: A cloud provider might use VXLAN to isolate customer networks. Customer A's VMs use VNI 1000 and communicate through VXLAN tunnels across multiple physical servers, while Customer B's VMs on the same physical servers use VNI 1001—remaining completely isolated despite sharing hardware.