Difference between Underlay Network and Overlay Network

Amit Bhardwaj | Blog,Routing & Switching

Introduction to Underlay & Overlay Network

IT industry is making great strides towards efficiency and scalability to meet the virtualization demand. The key ask is for the demand of multitenancy and virtualization features like VM mobility as turnkey projects.

Underlay Networl and Overlay Network

Related – HLD and LLD

Network Overlays –

Network overlays is the latest solution to meet these demands, in fact, this technology can speed configuration of new or existing services.


Underlay Network –

Underlay Network is different from Underlay Network which IT industry has known for years. Underlay Network is physical infrastructure above which overlay network is built. It is the underlying network responsible for delivery of packets across networks.

Overlay Network –

An Overlay Network is a virtual network that is built on top of underlying network infrastructure (Underlay Network). Actually, “Underlay” provides a “service” to the overlay

Related- Networking Scenario Based Interview Questions

Below table enumerates the difference between Underlay Network and Overlay Network:

Underlay Network is physical infrastructure above which overlay network is built.
An Overlay network is a virtual network that is built on top of an underlying Network infrastructure/Network layer (the underlay).
Related protocols
Ethernet Switching, VLAN , Routing etc.
Less Scalable due to technology limitation
Designed to provide more scalability than underlay network. For e.g. – VXLAN (underlay Network) provides 4096 Vlan support while VXLAN (Overlay Network) provides upto 16 million identifiers.
Packet control
Hardware orchestered
Software orchestered
Packet delivery
Responsible for delivery of packets
Offloaded from delivery of packets
Packet encapsulation and overhead
Packet delivery and reliability occurs at layer 3 and Layer 4
Needs to encapsulate packets across source and destination, hence incurs additional overhead.
Managing multitenancy
NAT or VRF based segregation required which may face challenge in big environments
Ability to manage overlapping IP addresses between multiple tenants.
Multipath forwarding
Less scalable options of multipath forwarding. Infact using multiple paths can have associated overhead and complexity.
Support for multi-path forwarding within virtual networks.
Deployment time
Less scalable and time consuming activity to setup new services and functions
Ability to rapidly and incrementally deploy new functions through edge-centric innovations
Traffic flow
Transmits packets which traverse over network devices like Switches and Routers.
Transmits packets only along the virtual links between the overlay nodes.

Download the comparison table underlay vs overlay network.

Continue Reading:

Difference between VxLAN and OTV

Know more about Cloud Overlay network in this video :


Leave a Comment

Your email address will not be published. Required fields are marked *

Shopping Cart