illumos gate

The VXLAN protocol itself, which is a RFC draft right now, is a tunnelling protocol that is designed to solve the problem of limited number of available VLANs (4096). With vxlan the identifier is expanded to 24 bits. The protocol runs over UDP using a single destination port. Unlike most tunnels, a VXLAN is a 1 to N network, not just point to point. A VXLAN device can either dynamically learn the IP address of the other end, in a manner similar to a learning bridge, or the forwarding entries can be configured statically.

VXLAN is backed by Cisco, VMWare, Arista, Broadcom, Citrix and Red Hat. It will be a key standard for cloud computing networking in years to come. Having this in illumos will make it more competitive with other hypervisors. This might be particulary interesting for Joyent and their SmartOS hypervisor.

VXLAN support should either be added to vnic directly or creating a new type of vnic e.g vxvnic, which will handle VXLAN stuff. vxvnic could then be usable just like a ordinary vnic. dladm *-vxlan should pretty much resemble dladm *-vnic actions.

Rumours say that Pluribus Networks might have a working implementation of VXLAN for illumos. I cannot confirm this (maybe they can express themselves) or that they are interested in upstreaming

Interesting stuff to read:
Linux implementation: http://www.spinics.net/lists/netdev/msg211565.html
Current draft: http://tools.ietf.org/html/draft-mahalingam-dutt-dcops-vxlan-04
VXLAN use case (if not obvious): http://it20.info/2012/05/typical-vxlan-use-case/