Layer 2 Switch vs Layer 3 Switch - What’s the Difference?

Quick Definition: Layer 2 switches offer basic functionality and are simple to set up at a lower cost. Layer 3 switches offer advanced features like routing and VLANs, and can provide higher throughput at lower latency, but are much more expensive.

Networks are the backbone to IT infrastructure, and no network runs without switches. They are the primary device for connecting together end-user devices, servers, wireless access points, and routers into functional networks. Switches aren't all the same, however, and there are two main types: Layer 2 and Layer 3. Choosing between the two is essential in effective network design.

If you are familiar with the OSI model, the terms "Layer 2" and "Layer 3" might sound familiar. Indeed these are borrowed from the OSI model and hint at the functionality they provide. We'll explore that functionality today to better equip you to understand what these two types of switches do, the features and benefits of both, and how to choose between the two to make informed decisions around your organization's networking needs.

What are Layer 2 Switches?

A Layer 2 switch works at the data link layer of the OSI model. This layer is primarily concerned with moving data around in the form of frames, which are essentially data payloads wrapped with headers containing the source and destination MAC addresses (MACs are the hardware address of a network interface). If you've heard of packets (which work on layer 3), a frame is basically a packet without the source and destination IP info attached.

This concept of moving packets around by MAC addresses is fundamental to Layer 2 switches, as that is fundamentally all they do. When receiving a frame, they flood out the packet to all ports to figure out where that frame's destination MAC address is. Once a device replies that it owns that MAC, the switch remembers that info for next time and forwards the frame on its way. 

The switch stores this info in a MAC address table, basically a list of MAC addresses it knows about and what port they are connected to. This can be the network interface for a computer directly connected to the same switch, or another switch further down the line. 

Advantages of Layer 2 switches include:

• Simple Setup: Plug-and-play connectivity with minimal configuration

• Cost-Effective: Much cheaper than Layer 3 models

• Low Overhead: No complex features to manage, making them easy to support

• Reliable: Great for small offices, classrooms, or labs where advanced routing isn’t needed

Layer 2 switches don't offer any extra features or functionality; sometimes they are called "dumb" switches (as opposed to feature-rich Layer 3 "smart" switches). But it's this simplicity that is their superpower. They are easy to set up (just connect all your devices via ethernet cables) and you have a functional LAN. They are also cost effective and perfect solutions for small to medium-sized networks without any need for advanced features.

What are Layer 3 Capable Switches?

A Layer 3 switch works at both the data link later and the network layer of the OSI model. With the addition of the network layer, they can forward traffic based on MAC addresses, but also do basic routing based on the IP address destinations of packets. They effectively combine the features of a switch and a router.

Benefits of layer 3 switches include: 

• Routing Support: Can forward traffic between different subnets without needing a separate router

• VLANs: Segment one physical network into multiple logical ones for security and organization

• QoS: Prioritize critical traffic like VoIP or video conferencing

• Scalability: Designed to grow with larger and more complex networks

• Performance: Higher throughput and lower latency for bandwidth-heavy environments

The important distinction between the forwarding action of a Layer 2 switch and packet routing is that routers (and Layer 3 switches) can move packets intelligently between different network subnets. This allows you to segment your network into different logical divisions and improve the organization, security, and management of larger or more complex networks.

Layer 3 switches also have lots of other tricks up their sleeve. One is VLANs, which lets you break up one physical switch into smaller logical switches to keep traffic separated (VLANs are a whole separate topic better explored elsewhere). 

Layer 3 switches can also do basic quality of service (QoS) functions, like limiting the download speed of individual devices or always giving priority to certain kinds of traffic, like voice or videoconferencing. Layer 3 switches are also generally more robust, offering better throughput and reduced overall latency, as they are intended for use in larger, more bandwidth-heavy networks.

Want to dig deeper? Check out our Networking Fundamentals Online Training with Keith Barker. 

Key Differences Between Layer 2 and Layer 3 Switches

At a glance, the differences come down to scope and sophistication. Layer 2 switches are like local traffic cops—they keep order on one street (a single subnet). Layer 3 switches, on the other hand, act more like highway patrol—they can manage traffic between different neighborhoods (subnets) and optimize traffic flows with advanced features like VLANs and QoS. The trade-off? Cost and complexity. 

This chart breaks down the core differences: 

How Do You Choose the Right Switch for Your Network?

Hopefully, given the differences we've highlighted between Layer 2 and Layer 3 switches, making the right choice for your network shouldn't be difficult. Run a small network with a small budget and no need for advanced features like routing across subnets or VLANs? Layer 2 switches all the way. More complex networks with the need for QoS, VLANs, and the like? Layer 3 for you. 

Here are the key considerations you'll want to keep in mind: 

• Network Size and Growth: Small, single-subnet networks with basic connectivity needs can run perfectly on Layer 2 switches. Larger or expanding environments often need Layer 3 for routing, VLANs, and scalability.

• Routing Requirements: If your network requires traffic to move between different subnets or VLANs, Layer 3 switches (or a hybrid design) are the right choice.

• Performance and Security Needs: Environments that rely on video conferencing, VoIP, or other latency-sensitive applications benefit from Layer 3 QoS features. Layer 3 switches also support more advanced traffic segmentation and policies.

• Budget Constraints: Layer 2 switches are cost-effective and easy to deploy, making them ideal for smaller IT budgets. Layer 3 switches are pricier but may offset router costs and reduce bottlenecks in large networks.

There can be a few nuances however. How about a hybrid model? Maybe only a few devices require VLANs and for everything else on the network, simple is good enough. A solution is to use one expensive Layer 3 switch and the rest are Layer 2. Especially given the differences in prices, there are multiple solutions to get the benefits of both switch types.

Here's a quick guide to choosing between Layer 2 and Layer 3 switches:

• Small network, low budget, no advanced features needed? Choose Layer 2.

• Need VLANs or routing across subnets? Choose Layer 3.

• Require QoS for video conferencing or VoIP (like dedicated conference rooms)? Choose Layer 3.

• Want to scale into larger, more complex architectures? Use a Layer 3 core switch with Layer 2 edge/distribution switches.

• Only a handful of devices need VLANs or QoS? Use a hybrid setup (one Layer 3 switch for advanced needs, Layer 2 for everything else).

Overall, layer 2 switches provide reliable, simple connectivity within a single subnet, making them perfect for small to medium networks with low requirements and especially for IT departments on a tight budget. Layer 3 switches add many complex features like routing, VLANs, and QoS. 

Choosing the right one comes down to understanding your requirements and some creativity perhaps in combining the best features of both. Taking the time to plan carefully will yield the best results and get the best return on your investment.

Final Thoughts 

At the end of the day, the choice between Layer 2 and Layer 3 switches comes down to balancing simplicity, cost, and features. If you’re running a small office network with limited requirements, Layer 2 switches deliver dependable performance without draining your budget. If your environment demands routing between subnets, VLAN segmentation, or QoS to keep mission-critical apps running smoothly, Layer 3 switches are the better investment.

Many organizations actually use a mix of both: a Layer 3 switch at the core to handle routing and advanced functions, and multiple Layer 2 switches at the edge to keep things cost-effective. By mapping your network’s current needs and anticipating future growth you’ll know which option (or combination) is the right fit.

Want to learn more? Check out our Cisco CCNA training to learn more about switching fundamentals.