Cisco Enterprise Network Core Technologies (ENCOR) Practice Exam 2025 - Free ENCOR Practice Questions and Study Guide

VXLAN technology is indeed characterized by the use of UDP encapsulation to create MAC-in-IP overlays. This encapsulation method allows VXLAN to extend Layer 2 networks over a Layer 3 infrastructure, enabling the creation of virtualized networks that span different locations. By encapsulating Ethernet frames within a UDP header, VXLAN can ride on top of existing IP networks, which facilitates network scaling and flexibility in large cloud environments.

Moreover, the use of MAC-in-IP structures enables the use of a 24-bit VXLAN Network Identifier (VNI), allowing for the segmentation of up to 16 million logical networks, which is a significant increase compared to the limitations of traditional VLANs. This capability is essential for managing large-scale environments and multi-tenancy scenarios, making VXLAN a popular choice in modern data centers and cloud environments.

In contrast, the other options inaccurately describe the nature or capabilities of VXLAN. For example, while VXLAN often operates in Layer 3, stating that it functions exclusively at this layer ignores its ability to extend Layer 2 networks. Also, VXLAN is an open standard, not a proprietary solution from Cisco, and it does support various control planes, allowing it to manage traffic within the encapsulated overlays effectively.