VXLAN stands for Virtual Extensible Local Area Network.

VXLAN is a virtual overlay network that is built on top of Open Systems Interconnection Model (OSI) Layer 2 and Layer 3 technology. VXLAN extends the virtual LAN (VLAN) address space.

VLAN supports the assignment of up to 4096 VLAN IDs at a time, which may be insufficient for big-scale cloud computing. VXLAN adds a 24-bit segment ID, and hence, increases the number of available VLAN IDs to 16 million.