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A virtual router is a software-based routing function or logical routing context that connects virtual networks. Combined with virtualized compute and storage, isolated tenant networks, and services such as firewalls or load balancers, it helps create a virtual data center: a logical environment that looks like a data center to its tenant while running on shared physical infrastructure.
What is a virtual router?
The term does not describe one standardized product category. It can mean routing implemented in software or a logical routing context associated with a virtual network. Depending on the design, routing may happen at the network-virtualization edge or in a separate control entity. The IETF describes both possibilities in its RFC 7365 framework for data-center network virtualization.
A virtual router connects Layer 3 (L3) networks or provides a controlled path for traffic between virtual networks. It does not necessarily have to be a standalone virtual machine: the routing and virtualization functions may be implemented in a hypervisor virtual switch, a physical switch or router, a network service appliance, or across multiple devices, as RFC 7365 explains.
How virtual routers fit into virtual networking
Virtual networks and overlays
A virtual network is a logical network that provides Layer 2 (L2) or L3 connectivity to tenant systems. RFC 7365 defines it this way: “A VN is a logical abstraction of a physical network that provides L2 or L3 network services to a set of Tenant Systems.”
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Virtual networks can be carried as overlays over a shared physical L3 network, called the underlay. A network-virtualization edge (NVE) applies virtualization functions at the boundary of that underlay and forwards tenant traffic toward other NVEs. A virtual network instance (VNI) is a particular virtual-network forwarding context on an NVE. In simple terms, the underlay transports traffic between edges; the overlay provides the tenant-facing network service.
Routing and isolation
Separate virtual networks are commonly kept isolated. A router or security gateway can provide an explicitly controlled path between them when communication is needed. The IETF’s RFC 7364 problem statement for data-center network virtualization highlights the need to isolate tenant traffic and address spaces in multi-tenant environments. A virtual router is therefore not just a connectivity feature: its placement and policies help determine which networks can communicate.
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How the components create a virtual data center
A virtual data center is a tenant-facing logical environment. From the tenant’s perspective, it resembles a physical data center: systems attach to networks and can use services such as firewalls or load balancers. The physical compute, storage, and networking behind that environment may be shared among tenants.
- Pool the physical resources. Compute, storage, and network infrastructure provide the shared foundation.
- Create tenant virtual networks. The networks provide L2 or L3 connectivity over the physical underlay.
- Connect tenant systems to the overlay. An NVE, which may reside in a hypervisor switch, network device, or service appliance, forwards traffic across the underlay to other NVEs.
- Route only where needed. Virtual routing joins L3 networks or supplies a controlled path between otherwise isolated networks. Security gateways can enforce another boundary.
- Attach network services. Firewalls, load balancers, and similar services can be part of the tenant-facing environment.
Together, tenant systems, virtual networks, routing, and network services can provide the experience of a virtual data center without requiring a dedicated physical network for each tenant.
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What to compare when choosing a virtual-network design
There is no universal best placement or implementation. The right design depends on the service required, the isolation policy, and how the environment is operated.
| Design choice | What to establish |
|---|---|
| Network service | Whether tenants need L2 Ethernet-like service, L3 IP/VRF-like service, or both, as described in RFC 7365. |
| Routing placement | Whether routing occurs locally at the NVE or in a separate control entity; both are architectural options in RFC 7365. |
| Implementation location | Whether the NVE is part of a hypervisor virtual switch, a physical switch or router, a network service appliance, or split across devices (RFC 7365). |
| Isolation and policy | How tenant traffic and address spaces remain separated, and which explicitly controlled routes or security-gateway paths permit communication (RFC 7364). |
| Operations | How virtual networks are created, updated, and removed as tenant membership changes. The IETF frameworks describe dynamic environments where automated configuration matters (RFC 7364 and RFC 7365). |
OpenStack’s Ocata Networking Guide, release 15.0.0, is one platform-specific example of tenant networking that uses Neutron routers and firewall services. It is older documentation and should not be read as a description of the current OpenStack release. Cisco’s Virtualized Multi-Tenant Data Center Framework offers another vendor architecture example, not a neutral comparison of current products.
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What performance claims can—and cannot—tell you
The architecture references cited here do not establish a current, like-for-like performance benchmark across virtual-router platforms. Throughput and latency depend on the specific implementation and conditions, so a platform should not be ranked on those measures without relevant platform-specific benchmark evidence.
Quick Recap
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