A virtual local area network (VLAN) is any broadcast domain that is partitioned and isolated in a computer network at the data link layer (OSI layer 2). In this context, virtual, refers to a physical object recreated and altered by additional logic, within the local area network. VLANs work by applying tags to network frames and handling these tags in networking systems – creating the appearance and functionality of network traffic that is physically on a single network but acts as if it is split between separate networks. In this way, VLANs can keep network applications separate despite being connected to the same physical network, and without requiring multiple sets of cabling and networking devices to be deployed.

VLANs allow network administrators to group hosts together even if the hosts are not directly connected to the same network switch. Because VLAN membership can be configured through software, this can greatly simplify network design and deployment. Without VLANs, grouping hosts according to their resource needs the labor of relocating nodes or rewiring data links. VLANs allow devices that must be kept separate to share the cabling of a physical network and yet be prevented from directly interacting with one another. This managed sharing yields gains in simplicity, security, traffic management, and economy. For example, a VLAN can be used to separate traffic within a business based on individual users or groups of users or their roles (e.g. network administrators), or based on traffic characteristics (e.g. low-priority traffic prevented from impinging on the rest of the network's functioning). Many Internet hosting services use VLANs to separate customers' private zones from one other, allowing each customer's servers to be grouped in a single network segment no matter where the individual servers are located in the data center. Some precautions are needed to prevent traffic "escaping" from a given VLAN, an exploit known as VLAN hopping.

To subdivide a network into VLANs, one configures network equipment. Simpler equipment might partition only each physical port (if even that), in which case each VLAN runs over a dedicated network cable. More sophisticated devices can mark frames through VLAN tagging, so that a single interconnect (trunk) may be used to transport data for multiple VLANs. Since VLANs share bandwidth, a VLAN trunk can use link aggregation, quality-of-service prioritization, or both to route data efficiently.