If you're just getting started in the world of network administration and architecture, there's no better place to begin than with a solid understanding of virtual LANs (VLANs.)
In order to understand the purpose of VLANs, it's best to look at how Ethernet networks previously functioned. Prior to VLANs and VLAN-aware switches, Ethernet networks were connected using Ethernet hubs. A hub was nothing more than a multi-port repeater. When an end device sent information onto the Ethernet network toward a destination device, the hub retransmitted that information out all other ports as a network-wide broadcast.
The destination device would receive the information sent, but so would all other devices on the network. Those devices would simply ignore what the heard. And while this method worked in small environments, the architecture suffered greatly from scalability issues. Too much time was spent discarding received messages and waiting for a turn to transmit their own messages that Ethernet networks using hubs became congested.
A layer 2 aware switch solves this problem using two different methods. First, the switch has the ability to learn and keep track of devices by their MAC address. By maintaining a dynamic table of MAC address to switch port number, the switch has the ability to send messages directly from a source device to the destination device in a unicast transmission as opposed to a broadcast transmission that is sent to all devices. This is known as the switch forwarding table.
While the forwarding table does a great deal to limit broadcast messages, and thus reduce the amount of broadcast overhead, it does not completely eliminate it. Broadcast messages are still required in many situations. And as such, the more devices on a physical network, the more broadcast messages are going to be clogging up the network.
That leads us to our second method that layer 2 switches use to streamline Ethernet communication. Instead of having one large layer 2 network, VLANs are used to segment a switch -- or network of switches -- into multiple, logical layer 2 networks. Broadcast messages sent and received are contained within each smaller VLAN. Thus, if you have a network of 1,000 end devices and create 4 VLANs of 250 devices each, each logical network must only have to deal with 250 devices of broadcast overhead, as opposed to all 1,000 if they were on the same layer 2 network.