Hi
Its only required in SDN Fabric LAN if your managing it through ACI , in standard campus / DC setup its not required unless using 9k NX-OS in ACI mode you would need VXLAN , its very new only round a few years now , all switches can be then managed through GUI in ACI or still through cli if required although its easier to push the changes through policy , ACI allows all switches at once to receive the new policies , it cuts down on mgmt. of the LAN but can also introduce other issues as its centrally managed
https://www.cisco.com/c/en/us/products/collateral/switches/nexus-9000-series-switches/white-paper-c11-729383.html
here are some of the benefits
As its name indicates, VXLAN is designed to provide the same Ethernet Layer 2 network services as VLAN does today, but with greater extensibility and flexibility. Compared to VLAN, VXLAN offers the following benefits:
● Flexible placement of multitenant segments throughout the data center: It provides a solution to extend Layer 2 segments over the underlying shared network infrastructure so that tenant workload can be placed across physical pods in the data center.
● Higher scalability to address more Layer 2 segments: VLANs use a 12-bit VLAN ID to address Layer 2 segments, which results in limiting scalability of only 4094 VLANs. VXLAN uses a 24-bit segment ID known as the VXLAN network identifier (VNID), which enables up to 16 million VXLAN segments to coexist in the same administrative domain.
● Better utilization of available network paths in the underlying infrastructure: VLAN uses the Spanning Tree Protocol for loop prevention, which ends up not using half of the network links in a network by blocking redundant paths. In contrast, VXLAN packets are transferred through the underlying network based on its Layer 3 header and can take complete advantage of Layer 3 routing, equal-cost multipath (ECMP) routing, and link aggregation protocols to use all available paths.
VXLAN Encapsulation and Packet Format
VXLAN is a Layer 2 overlay scheme over a Layer 3 network. It uses MAC Address-in-User Datagram Protocol (MAC-in-UDP) encapsulation to provide a means to extend Layer 2 segments across the data center network. VXLAN is a solution to support a flexible, large-scale multitenant environment over a shared common physical infrastructure. The transport protocol over the physical data center network is IP plus UDP.
VXLAN defines a MAC-in-UDP encapsulation scheme where the original Layer 2 frame has a VXLAN header added and is then placed in a UDP-IP packet. With this MAC-in-UDP encapsulation, VXLAN tunnels Layer 2 network over Layer 3 network. The VXLAN packet format is shown in Figure 1.
