An NSX-T logical router reproduces routing functionality in a virtual environment completely decoupled from underlying hardware. Tier-1 logical routers have downlink ports to connect to NSX-T logical switches and uplink ports to connect to NSX-T tier-0 logical routers.
When you add a logical router, it is important that you plan the networking topology you are building.
For example, this simple topology shows two logical switches connected to a tier-1 logical router. Each logical switch has a single VM connected. The two VMs can be on different hosts or the same host, in different host clusters or in the same host cluster. If a logical router does not separate the VMs, the underlying IP addresses configured on the VMs must be in the same subnet. If a logical router does separate them, the IP addresses on the VMs must be in different subnets.