vSphere VXLAN networks are based on the IETF draft VXLAN standard. These networks support the local-domain isolation equivalent to what is vSphere isolation-backed networks support.
When you create a provider virtual datacenter, a VXLAN network pool is created in vCloud Director. When you use this network pool, VXLAN virtual wires are created in vCenter Server. Most configurations do not require network pools beyond the VXLAN network pool.
This pool is given a name derived from the name of the containing provider virtual datacenter and attached to it at creation. You cannot delete or modify this network pool. You cannot create a VXLAN network pool by any other method. If you rename a provider virtual datacenter, its VXLAN network pool is automatically renamed.
vSphere VXLAN networks provide the following benefits.
Logical networks spanning layer 3 boundaries
Logical networks spanning multiple racks on a single layer 2
Greater scale (up to 16 million network addresses)
For more information about VXLAN in a vCloud environment, see the vShield Administration Guide.