A review of the key properties of network virtualization can inform your planning and help in requirements generation as you architect new systems. The best source of information I’ve found on network virtualization is at Nicira, a firm anyone with infrastructure should be paying attention to now.
The following is drawn from their paper on The Seven Properties of Network Virtualization”
1. Independence from network hardware
In the emerging multi-tenant cloud, the old rules of vendor lock-in are rapidly changing. A network virtualization platform must be able to operate on top of any network hardware, much like x86 server hypervisors work on top of any server. This independence means the physical network can be supplied by any combination of hardware vendors. Over time, newer architectures that better support virtualization, as well as commodity options, are becoming available, further improving the capital efficiency of cloud.
Know more: what is DHCP and how it works?
2. Faithful reproduction of the physical network service model
The vast bulk of enterprise applications have not been written as web applications, and the cost/payback ratio of rewriting tens of billions of dollars of application development is neither realistic nor even possible. Therefore, a network virtualization platform must be able to support any workload that runs within a physical environment today. In order to do so, it must recreate Layer 2 and Layer 3 semantics fully, including support for broadcast and multicast. In addition it must be able to offer higher-level in-network services that are used in networks today such as ACLs, load balancing, and WAN optimization.