Routing Encapsulation (NVGRE) for the network virtualization implementation; it is
an extension of GRE, an IETF (Internet Engineering Task Force) standard. With
NVGRE, the network virtualization works by wrapping the originating packet from the
VM, which uses the CAs (which are all the virtual machine is aware of), inside a
packet that can be routed on the physical network using the PA IP addresses. The
wrapper also includes the actual virtual subnet, which represents a specific subnet
within a virtual network. Because the virtual subnet is included in the wrapper packet,
each VM does not require its own PA. The receiving host can identify the targeted VM
based on the CA target IP address within the original packet and the virtual subnet ID
in the wrapper packet. The virtual subnet ID is stored in the GRE key, which is a 24-
bit key allowing over 16 million virtual subnets, different scalability from the 4,000
limit of VLANs. The only information the Hyper-V host on the originating VM needs
to know is which Hyper-V host is running the target VM, and then it can send the
packet over the network.
This can be seen in Figure 3.31, where three virtual machines exist in a virtual
network and are running across two separate Hyper-V servers. In the figure, CA1 is
talking to CA2. However, note in the lookup table on the first Hyper-V server that the
PA address for CA2 and CA3 are the same, because they run on the same Hyper-V
host. The PA address is for each Hyper-V host rather than each virtual machine.
Figure 3.31 High-level overview of network virtualization using NVGRE
The use of a shared PA means that far fewer IP addresses from the provider IP pools
are needed, which is good news for IP management and the network infrastructure.
When thinking about the actual data going across the wire when using the NVGRE
encapsulation, the packet structure would be composed as shown in the following list.
As expected, the full Ethernet and IP header and payload from the virtual machine
communication is wrapped in an Ethernet and IP header that can be used on the
physical network fabric based on the Hyper-V host MAC addresses and PA IP
addresses. The full specification for NVGRE can be found at: