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Underlay vs. Overlay: Virtual Networking Explained

Key Points

  • Frank Chodacki introduces the fundamentals of virtual networking, emphasizing its essential role in cloud environments.
  • He distinguishes the **physical underlay** (the real hardware such as servers, switches, and routers) from the **virtual overlay** (the software‑defined network built on top of that hardware).
  • The **fabric** is defined as the collection of physical components that support a single instance of a virtual networking environment.
  • A **TEP (Tunneling End Point)** is the point where virtual traffic is encapsulated to traverse the physical network, acting like a “Russian‑doll” where the virtual packet is nested inside a physical frame.
  • Physical routers and bridges serve as ingress/egress points, bridging the underlay and overlay by handling both physical and virtual traffic.

Full Transcript

# Underlay vs. Overlay: Virtual Networking Explained **Source:** [https://www.youtube.com/watch?v=u0TgGIn2LIM](https://www.youtube.com/watch?v=u0TgGIn2LIM) **Duration:** 00:08:23 ## Summary - Frank Chodacki introduces the fundamentals of virtual networking, emphasizing its essential role in cloud environments. - He distinguishes the **physical underlay** (the real hardware such as servers, switches, and routers) from the **virtual overlay** (the software‑defined network built on top of that hardware). - The **fabric** is defined as the collection of physical components that support a single instance of a virtual networking environment. - A **TEP (Tunneling End Point)** is the point where virtual traffic is encapsulated to traverse the physical network, acting like a “Russian‑doll” where the virtual packet is nested inside a physical frame. - Physical routers and bridges serve as ingress/egress points, bridging the underlay and overlay by handling both physical and virtual traffic. ## Sections - [00:00:00](https://www.youtube.com/watch?v=u0TgGIn2LIM&t=0s) **Understanding Physical Underlay and Overlay** - IBM Cloud presenter Frank Chodacki explains virtual networking fundamentals by distinguishing the physical underlay (including the fabric of servers, switches, and routers) from the virtual overlay that operates on top of it. - [00:03:05](https://www.youtube.com/watch?v=u0TgGIn2LIM&t=185s) **Physical Routers Bridge Virtual Networks** - The speaker explains how physical routers and bridges serve as ingress/egress points linking a simple, “dumb‑pipe” physical layer to an intelligent virtual overlay that handles networking, firewalls, and topology diversity. - [00:06:27](https://www.youtube.com/watch?v=u0TgGIn2LIM&t=387s) **Virtual Routing, Bridging, and Micro‑Segmentation** - The speaker explains how virtual routers and bridges operate within a network fabric, how packets are de‑encapsulated via a physical router, and how micro‑segmentation enables firewalling between virtual machines. ## Full Transcript
0:00Hello, my name's Frank Chodacki. 0:02I'm part of the IBM Cloud team, 0:04and I'm here to explain the basics of virtual networking. 0:09Virtual networking is primarily used for cloud 0:13that's why it's important to at least understand the basics. 0:16So, we're going to start off with a couple of concepts within this video 0:20that will explain one of the key components 0:23to any given virtual infrastructure, 0:26specifically with regards to virtual networking. 0:29So, we're gonna start off with two concepts: 0:33we have the "physical underlay", 0:36and we'll talk about that first, 0:38and then we have the "virtual overlay". 0:41So, let's start off by talking about the underlay. 0:45The underlay is really just the physical infrastructure. 0:47It's computers, it's physical switches, physical routers, 0:51it's just with some specific software to be able to enable 0:55the virtual network which we call the "overlay". 0:58So, let's start off by talking about the underlay, 1:01and in some of these concepts we will talk about 1:03really lend themselves to both the underlay and the overlay. 1:08So, first off, with regards to the underlay, we have something called a fabric. 1:15So what is the fabric? 1:16The fabric is actually all of the physical components 1:20that are required to run, 1:23a single instance of a virtual networking environment 1:29or infrastructure. 1:31So, if we have, 1:34let's say, our 3 servers and a router here in our physical underlay, 1:38and anything outside of that would really constitute the fabric. 1:47Now, there's some variance in the this, and as you get more advanced topics 1:50you'll find out that the fabric can extend to lots of things 1:53but for the basics, let's just say it's the physical infrastructure 1:57that actually runs your virtual networking infrastructure. 2:01And, within that, we have something called a TEP. 2:05What is a TEP? 2:06A TEP stands for Tunneling End Point. 2:09Okay, a tunneling end point, 2:12... and let's just draw it here ... 2:15we've got our TEP here, TEP here, and a TEP here. 2:19A tunneling end point is the point at which 2:22a virtual network actually touches the physical network 2:28when it's going between the devices that actually comprise the fabric. 2:33So, when a virtual network goes across physical devices, 2:38it actually needs to be encapsulated. 2:40Think about those Russian dolls, 2:41you know are you open it up and there's another doll, 2:43it's kind of the same concept - 2:45when it goes on to the physical wire it's the little doll inside the big doll. 2:52The big doll goes across and then when it hits the next server, 2:56you open it up, the little doll, and goes to the virtual network, 2:59so it's encapsulation. 3:01Pretty basic terms, right, so tunneling end point. 3:05The next thing we'll talk about is routing 3:09and this could be virtual routers, but 3:13at this level let's talk about physical routers and bridges. 3:25These will appear both virtual and physical layer because they bridge both. 3:29So, a router in this case, 3:32this router here in the physical environment 3:34is really the embark, disembark, egress, ingress, 3:40in more networking terms, 3:41of where the physical network touches and gets into the virtual network. 3:48So, this could be one interface that touches a physical network 3:58and the other interface is in the virtual network, 4:00which we will describe in a minute. 4:02So, it's essential. 4:04If you didn't have this, you'd basically just have a snow globe 4:07where everything could talk to each other, but they couldn't get out. 4:10So, it's essential that we have routers and bridges running in the physical layer. 4:18So, I also like to call the physical layer a big dumb pipe. 4:21So, basically a network that doesn't really have much intelligence 4:25it just connects everything together, 4:26the intelligence we're gonna talk about is actually in the overlay. 4:31And the overlay is the virtual ... 4:36yeah, stay in school kids, so you learn how to write 4:41- not like me. 4:43So, the virtual layer is actually where 4:48I can be very prescriptive about the networking, 4:52the fire walls, I can have much diversity within the topology 4:58on top of what is a big dumb pipe. 5:01I can put all the intelligence in the virtual network, 5:03and I can have many of these duplicated on the same physical infrastructure. 5:08So, let's talk about some concepts within the virtual network. 5:11Within the virtual network we have segments. 5:17So, what is the segment? 5:19A segment is really just a layer 2 network on its own. 5:26So, it would be the equivalent to having a switch here and a switch here, 5:32they're not connected, or maybe they're connected by a router, those are segments. 5:36The next concept is a transport zone. 5:45So, transport zone is a collection of segments 5:49... and what does that mean? 5:51Well, I may not want my virtual fabric (up here), ... 5:59I may not want that virtual fabric to ... 6:04Maybe I only want it to go across these two hosts but not that host. 6:12So, a transport zone is a way to limit which 6:16of those segments and this fabric of what 6:20physical devices making up the physical fabric 6:24what devices they can actually run across. 6:27And then we have our old friend routers and bridges. 6:33So again, routers and bridges would really be the virtual point. 6:39We could also, within the fabric, we could have a pure virtual router. 6:45So, if I wanted to route between different segments 6:48and not really traverse out of the virtual network, 6:53I have a purely virtual router, 6:55and then I can uplink to a physical router 6:58which allows us to de-encapsulate the packet, 7:02(remember our friend TEP over here, which is a doll inside of a doll), 7:06I can de-encapsulate the packet and allow it to traverse out on to the physical network 7:10to get to the internet, or another site, etc. 7:14And then actually there's one more concept 7:16which is called micro-segmentation. 7:27Micro-segmentation, what is that? 7:29Well, that means I can firewall, 7:33because all of this is really running on top of another operating system 7:36which is down here in the physical layer. 7:38It means I can insert all kinds of services 7:41in the network fabric that makes up the overlay. 7:45And so, one of those things can be a firewall. 7:48So, I can firewall traffic between VM's 7:53on the same segment if I wanted to. 7:56So, it's akin to having a physical switch port 7:58where every physical computer you plug into that port 8:02is firewalled off from every other port. 8:04You can configure exactly what type of traffic you want to traverse across your fabric. 8:10And there you have it. 8:11Those are the basics of a virtual network. 8:14Thank you for watching. 8:16If you have any questions please drop us a line. 8:18If you would like to see more videos like this in the future be sure to "LIKE" and subscribe.