Which statement correctly describes VXLAN?

VXLAN (Virtual Extensible LAN) is a network virtualization technology that encapsulates Layer 2 Ethernet frames within Layer 3 UDP packets. This allows for the creation of logical Layer 2 networks (segments) that can span across a Layer 3 underlay network, effectively overcoming the limitations of traditional VLANs. Its primary benefit is enabling multitenancy, where multiple independent virtual networks can coexist on a shared physical infrastructure, each isolated from the others. Incorrect options: "It supports a maximum of 4096 VLANs" is incorrect because VXLAN uses a 24-bit VXLAN Network Identifier (VNI), allowing for over 16 million unique segments, far exceeding the 4096 limit of traditional VLANs. "It uses STP to prevent loops in the underlay network" is incorrect. VXLAN operates over a Layer 3 underlay, which typically uses routing protocols (like OSPF or EIGRP) to prevent loops, not STP. STP is primarily for Layer 2 loop prevention. "It uses the Layer 2 header to transfer packets through the network underlay" is incorrect. VXLAN encapsulates the original Layer 2 frame within a new UDP header and an outer IP header for transport across the Layer 3 underlay.