Example Concept: Layer 2 switches focus on switching frames based on MAC addresses, providing high-speed data transfer within a local network segment. They are ideal for creating VLANs and segmenting broadcast domains. In contrast, Layer 3 switches combine the capabilities of Layer 2 switching with Layer 3 routing, allowing them to route packets between VLANs using IP addresses. This makes them suitable for larger, more complex networks where inter-VLAN routing is necessary, offering both switching efficiency and routing flexibility.