What Is VXLAN?

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VXLAN, or Virtual Extensible LAN, is a network virtualization technology widely used on large Layer 2 networks. VXLAN establishes a logical tunnel between the source and destination network devices, through which it uses MAC-in-UDP encapsulation for packets. Specifically, it encapsulates original Ethernet frames sent by a VM into UDP packets. It then encapsulates the UDP packets with the IP header and Ethernet header of the physical network as outer headers, enabling these packets to be routed across the network like common IP packets. This frees VMs on the Layer 2 network from the structural limitations of the Layer 2 and Layer 3 networks.

https://info.support.huawei.com/info.../en/VXLAN.html