Overlay

An Overlay is a virtual network structure that operates on top of an existing physical network, commonly referred to as the underlay. It creates logical connections between endpoints without requiring corresponding changes to the underlying network topology. Data packets are commonly encapsulated for transmission across the physical infrastructure. Technologies such as VXLAN, GRE and IPsec can be used to establish these virtual network connections. Overlay networks enable flexible segmentation, scalability and centralised management of complex IT infrastructures. They are particularly important in data centres, cloud environments, Software-Defined Networking and SD-WAN architectures. By separating the logical network from the physical infrastructure, virtual networks can be configured and adapted independently of the underlying network design.