When a virtual machine generates traffic broadcast, unknown unicast, or multicast  (BUM) meant for another virtual machine on the same virtual network identifier (VNI) on a different host, the outer IP header block in the VXLAN frame contains the source and the destination IP addresses that contain the source hypervisor and the destination hypervisor. When a packet leaves the source virtual machine, it is encapsulated at the source hypervisor and sent to the target hypervisor. The target hypervisor, upon receiving this packet, de-encapsulates the Ethernet frame and forwards it to the destination virtual machine. Control plane modes play a crucial factor in optimizing the VXLAN traffic depending on the control plane modes selected for the logical switch/transport scope:

• Unicat
• Hybrid
• Multicast

By default, a logical switch inherits its replication mode from the transport zone. However, we can set this on a per logical switch basis. The segment ID is needed for multicast and hybrid mode.

The following is a representation of the VXLAN encapsulated packet showing the VXLAN headers:

As indicated in the preceding figure, the outer IP header identifies the source and the destination VTEPs. The VXLAN header also has the VNI, a 24-bit unique network identifier. This allows for scaling virtual networks beyond the 4094 VLAN limitation placed by the physical switches. Two virtual machines that are part of the same virtual network will have the same virtual network identifier, similar to how two machines on the same VLAN share the same VLAN ID.