What are "Overlay networks" in NSX-T?

Overlay networks in NSX-T refer to virtual networks that utilize encapsulation techniques to transport data over existing physical network infrastructure. This approach separates the virtual network from the physical network, allowing for greater agility and flexibility in network management.

In an overlay network, virtual packets are encapsulated into a format that can be transmitted over the underlying physical network. This enables the creation of isolated virtual networks that can span multiple physical locations without the need for additional physical infrastructure changes. The encapsulation method used (for example, VXLAN) allows NSX-T to efficiently manage and route traffic using logical constructs rather than being constrained by the physical layout of the network.

This capability is significant for organizations looking to implement cloud-native technologies, support multi-tenancy, and quickly provision network resources without modifying existing hardware configurations. The overlay network architecture enhances scalability, enables micro-segmentation for improved security, and facilitates the rapid deployment and management of network services.