In Pictures: Software-defined networking explained

Understand how SDN will change everything in 10 easy steps

Tunnel networking New tunneling protocols like VXLAN and NVGRE allow for new networks -- called "overlay networks" -- to be abstracted from the physical network and configured in the virtual switch. These tunneling protocols encapsulate the Ethernet data inside an IP packet and traverse the physical network, allowing two VMs on different Layer 3 subnets to communicate on the same Layer 2 network. Tunnels do not need to know about the underlying physical network configuration and vice versa. As a result, virtual network connections between hypervisors can be configured without any dependency on the physical network.

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