Question 83 of 989
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VXLAN: Encapsulation in UDP and Up to 16 Million Networks
Which TWO statements are true about VXLAN? (Choose two.)
Quick Answer
The answer is that VXLAN supports up to 16 million logical networks and encapsulates the original Layer 2 Ethernet frame inside a UDP packet. This is correct because VXLAN, or Virtual Extensible LAN, uses a 24-bit segment ID called the VNI (VXLAN Network Identifier), which provides 2^24 or roughly 16 million unique logical networks, far exceeding the 4096 VLAN limit. The encapsulation in UDP, typically on destination port 4789, allows the Layer 2 frame to be tunneled over a Layer 3 IP underlay, enabling scalable network virtualization without physical topology changes. On the Cisco DevNet Associate 200-901 exam, this tests your understanding of overlay networking and data center virtualization; a common trap is confusing VXLAN with VLAN or assuming it uses TCP instead of UDP. Remember the mnemonic: "VXLAN's 24-bit VNI gives 16 million networks, all wrapped in UDP for Layer 3 transport."
⚠ Common exam trap
Cisco often tests the misconception that VXLAN is a pure Layer 2 technology, but the trap here is that VXLAN encapsulates Layer 2 frames into Layer 3 UDP packets, making it a Layer 2 overlay over a Layer 3 underlay.
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
VXLAN encapsulates Ethernet frames in UDP packets
VXLAN (Virtual Extensible LAN) encapsulates the original Layer 2 Ethernet frame inside a UDP packet (typically UDP destination port 4789). This allows the Layer 2 frame to be transported over a Layer 3 IP network, enabling network virtualization and overlay networking without requiring changes to the physical underlay.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
VXLAN requires MPLS in the underlay
Why it's wrong here
VXLAN can run over any IP network.
- ✓
VXLAN encapsulates Ethernet frames in UDP packets
Why this is correct
VXLAN uses UDP encapsulation.
- ✗
VXLAN uses IP-in-IP encapsulation
Why it's wrong here
VXLAN uses MAC-in-UDP.
- ✗
VXLAN operates at Layer 2 only
Why it's wrong here
VXLAN is an overlay over Layer 3.
- ✓
VXLAN supports up to 16 million logical networks
Why this is correct
24-bit VNI provides 16 million segments.
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Same concept, more angles
1 more way this is tested on 200-901
These questions test the same concept from different angles. Work through them to make sure you can recognise it however the exam phrases it.
Variation 1. A DevOps team is deploying a containerized application across multiple hosts. They need to ensure that traffic between containers on the same host is isolated from other tenants. Which network implementation best meets this requirement?
hard- A.Linux bridge with ebtables rules
- B.NAT with port forwarding
- ✓ C.VXLAN overlays with a distributed virtual switch
- D.802.1Q VLANs on the host switch
Why C: VXLAN overlays with a distributed virtual switch provide Layer 2 isolation across multiple hosts by encapsulating Ethernet frames in UDP packets (RFC 7348). This creates independent virtual networks (VXLAN segments) that can span hosts, ensuring traffic between containers on the same host is isolated from other tenants without relying on physical network topology.
Last reviewed: Jun 11, 2026
This 200-901 practice question is part of Courseiva's free Cisco certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the 200-901 exam.
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