Each device, which participates on a
network, must have a unique id: A MAC address (also known as layer 2
address, hardware address, or physical address). MAC addresses can be
easily identified and maintained for LANs up to a certain size;
however, the addresses become unmanagemable for large unsegmented LANs
or WANs. The layer 3 or network addressing scheme, which is
hierarchical, was created because a new addressing scheme was needed.
By requiring that all networks connected to the router have their own
network id number, the router can refer to a group of hosts with one
network layer (often IP) address. The router builds tables of device
hardware and network addresses (typically MAC and IP addresses) and by
which interface these networks can be reached. Thus the routers use
the network id address to efficiently make best path selection and
switching decisions.
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