In NSX-T, what does the term "Overlay" refer to?

The term "Overlay" in NSX-T refers to a virtual network architecture that is created on top of the existing physical network infrastructure. This allows for the creation of virtualized networking services that can operate independently of the underlying hardware. By using overlays, network traffic can be encapsulated, enabling features such as logical switching, routing, and security to be implemented in a flexible and scalable manner.

Overlays are instrumental in enabling multi-tenancy, automation, and efficient resource utilization, as they abstract the physical constraints of the network and allow virtual networks to be provisioned rapidly. This virtual network layer can run alongside multiple physical networks, enhancing agility and delivering services without needing changes in the underlying infrastructure.

In the context of the other options, the physical layer of networking hardware does not align with the definition of an overlay, as overlays are inherently virtual concepts. A backup solution for network configurations does not describe the functionality of overlays and instead pertains to disaster recovery and backup strategies. Lastly, while integration with third-party solutions can occur in a virtualized environment, it is not the defining characteristic of what an overlay is. Hence, the definition as a virtual network built on top of existing infrastructure is the most accurate.