This IT 2.0 blog post on Typical VxLAN Usecases makes some interesting points about VxLAN:
- That it is not Layer-2 that has a problem getting extended across the data center, but Layer 3 routing and its architecture which limits the layer 2 broadcast domain under its head. Extending layer 2 across layer 3 domains will confuse layer 3 architecture. Moreover host discovery through ARP will not be possible.
- The basic difference between GRE (and likes) and VxLAN is that GRE requires configuration across all the network nodes to run tunnels, while VxLAN needs only software configuration that to inside a hypervisor. Without the network admins knowing it, layer 2 domains will get extended across VMWare nodes. This is significant.