VXLAN network model

A VXLAN is a virtual layer 2 network (known as the overlay network) built on top of an existing physical layer 3 network (known as the underlay network). VXLAN uses a logical tunnel to transport traffic between two endpoints. The tunnel traverses the underlay network, encapsulating the layer 2 traffic in a VXLAN packet.

A tunnel endpoint is called a virtual tunnel endpoint (VTEP). VTEPs are responsible for encapsulation and decapsulation of network traffic.