How does a Layer 3 switch work in a network?
A Layer 3 switch works exactly like a Layer 2 switch but instead uses Layer 3 information for switching the packets. That is, instead of the MAC address, it uses the IP address for making a switching decision. As it uses the IP address for making that decision, it can incorporate some features of routers like access lists and routing protocols. They can reprogram their ASIC using Layer 3 information, which is a different feature from a router. That is why they allow faster packet processing.
Hope this helps.
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