When a packet is encapsulated by VXLAN, a VXLAN Network Identifier (VNI) is placed in the VXLAN header. This VNI is crucial as it maps to the VLAN-ID, ensuring that the packet is correctly identified and routed within the overlay network.

References:

• Juniper Networks - VXLAN Overview

To accommodate the extra header information added by VXLAN, which can be 50 to 54 bytes, it's necessary to increase the MTU (Maximum Transmission Unit) on the physical interfaces connected to the VXLAN network. This ensures that the larger frames can be transmitted without fragmentation, maintaining efficient network performance.