Example Concept: VXLAN encapsulates Ethernet frames within UDP packets, allowing for the creation of a virtual Layer 2 network over a Layer 3 infrastructure. This enables the extension of VLANs across data centers without the need for physical connectivity, providing greater scalability and flexibility. VXLAN uses a 24-bit segment ID, known as the VXLAN Network Identifier (VNI), which supports up to 16 million unique network segments, compared to the 4096 limit of traditional VLANs.