An IP fabric with a leaf-spine architecture provides full forwarding and scalability through a non-blocking design. Leaf devices connect to access spines which aggregate traffic. Overlays create virtual tunnels for tenant communication using technologies like VXLAN that encapsulate Layer 2 frames in UDP packets, enabling Layer 2 adjacency across IP networks. VXLAN segments traffic using VXLAN Network Identifiers (VNIs) associated with VLANs to extend Layer 2 networks across hosts.