What technology does NSX-T utilize for overlay networking?

NSX-T utilizes VXLAN (Virtual Extensible LAN) for overlay networking, which allows for the encapsulation of Layer 2 Ethernet frames within Layer 4 UDP packets. This technology is designed to support large-scale virtualized environments by providing a means to create logical Layer 2 networks over existing Layer 3 infrastructure.

VXLAN addresses the limitations of traditional VLANs, especially with respect to their scale and range. With the increasing demand for isolated networks in cloud environments, VXLAN can support up to 16 million logical networks by employing a 24-bit segment ID, in contrast to the 4096 VLANs supported by standard VLAN tagging.

Additionally, VXLAN provides benefits such as multi-tenancy, enhanced security through separation of tenant networks, and improved network scalability. This makes it particularly suitable for NSX-T, which is focused on delivering a network architecture that is flexible, scalable, and capable of meeting the demands of modern applications.