VLANs have been covered extensively in other Q&As, so I'll briefly mention what they are, and you can check back to my previous posts in order to get more details.
VLANs are what I like to call a new "trend" :)
VLANs were introduced to help divide your physical and logical network, without additional costs to hardware, by using the same switch.
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Not all switches support VLANs, so in order to make use of them, your switch must support them. From there, you can define which ports on your switch will belong to the different VLANs you will create.
For example, you can tell your switch that ports 1,2,3 and 4 are part of VLAN No.1, while ports 5,6,7 and 8 belong to VLAN No.2. You then configure all machines in each VLAN to be part of one logical network, isolating them from the rest. All broadcasts, multicasts and other data are propagated only to the ports that belong to the same VLAN from which the data came from.
I guess we have covered your question in enough detail, so if you're looking for more information, as I suggested, check out my earlier posts.
This was first published in September 2003