Layer 3 Switch

In short: A switch that, in addition to classic layer 2 switching, also masters routing functions at layer 3 (the IP level).

In more detail: Combines the high port density and speed of a layer 2 switch with a router’s ability to switch between different subnets/VLANs — handy for larger corporate networks in which many VLANs have to communicate with each other.

In Depth

At its core, a layer 3 switch is a layer 2 switch with additional built-in, hardware-accelerated routing — so it can both switch classically within a network based on MAC addresses and forward BETWEEN different subnets/VLANs based on IP addresses:

Traffic within VLAN 10           -> pure layer 2 switching (fast, MAC-based)
Traffic from VLAN 10 to VLAN 20  -> layer 3 routing (IP-based, between VLANs)

The practical advantage over a separate router lies in performance: classic routing via a software router is considerably slower than switching in dedicated hardware (ASICs), because every packet has to be processed by the processor. A layer 3 switch implements the routing decisions directly in specialised hardware, so routing between VLANs runs at almost the same speed as pure layer 2 switching — for corporate networks with many internal VLANs that have to communicate with each other (e.g. the accounting VLAN accessing central database servers in the server VLAN), that’s the decisive reason to use layer 3 switches instead of separate routers.

In practice, however, the pure external internet connection (connection to the provider, NAT, more complex firewall rules) is usually still handled by dedicated routers or firewall appliances — layer 3 switches are primarily optimised for fast internal routing between VLANs in the same network, not for the full range of functions of an edge router.

See also: Layer 2 switch, Router, VLAN