Many
telcos use overlay networks to provide services over their physical infrastructure. In the networks that connect physically diverse sites (
wide area networks, WANs), one common overlay network technology is BGP VPNs. These
VPNs are provided in the form of a service to enterprises to connect their own sites and applications. The advantage of these kinds of overlay networks is that the telecom operator does not need to manage addressing or other enterprise-specific network attributes. Within data centers, it was more common to use
VXLAN, however due to its complexity and the need to stitch
layer-2 VXLAN-based overlay networks to
layer-3 IP/BGP networks, it has become more common to use BGP within data centers to provide layer-2 connectivity between
virtual machines or
Kubernetes clusters.
Enterprise private networks were first overlaid on
telecommunication networks such as
Frame Relay and
Asynchronous Transfer Mode (ATM)
packet switching infrastructures but migration from these (now legacy) infrastructures to IP-based
MPLS networks and
virtual private networks started (2001~2002) and is now completed, with very few remaining Frame Relay or ATM networks. From an enterprise point of view, while an overlay VPN service configured by the operator might fulfill their basic connectivity requirements, SD-WAN overlay networks offer additional flexibility. The Internet is the basis for more overlaid networks that can be constructed in order to permit
routing of messages to destinations not specified by an
IP address. For example,
distributed hash tables can be used to route messages to a node having a specific
logical address, whose IP address is not known in advance. Overlay networks can be incrementally deployed at end-user sites or on hosts running the overlay protocol software, without cooperation from
Internet service providers. The overlay has no control over how packets are routed in the underlying network between two overlay nodes, but it can control, for example, the sequence of overlay nodes a message traverses before reaching its destination. ==Advantages==