The core to the virtual network is the virtual switch. The virtual switch has uplinks from physical switches via physical network interface cards (pNICs) and ports that attach to virtual machines. But what other features define the virtual switch?
Let's start with what a virtual switch is not. Technically speaking, KVM, XenServer, Open Source Xen and Hyper-V, plus all the hosted virtualization products, use a virtual bridge and not a virtual switch. There is not much difference between a bridge and a switch. They both send data between two different segments of a network and they both verify the data being sent.
However, virtual switch software has many more features available to it and can perform more complex operations, including the implementation of virtual LANs, EtherChannel and other more advanced networking tools.
In either case, the pNICs are placed in bridging mode, and you bridge from a physical switch to a virtual switch. This is just like putting an uplink cable between two physical switches. We are in essence uplinking from the physical switch to the virtual switch. In some cases, it is also possible to have virtual switches that are not connected to any pNIC, thereby creating fully virtualized networks.
Each virtual switch system for each hypervisor has different virtual switch security mechanisms. Currently, VMware vSphere has some of the more advanced capabilities, but this will change when the Xen OpenVSwitch is available.
Connected to the virtual machine side of each virtual switch is a virtual network interface card (vNIC). There can be one or more vNICs per VM. However, it is not possible to layer virtual switches, i.e., one virtual switch cannot directly attach to another virtual switch. To connect a virtual switch to another virtual switch from within the virtual network, you must place a VM between them. These VMs would have at least 2 vNICs and act either as a router, firewall or gateway device. By using VMs that act as these types of devices, it is possible to build very complex virtual networks.
The key to virtual switch configuration is that the switch connects on one side to the physical network through the pNICS, and on the other side a virtual switch connects to the virtual machines via the VM's vNICs. This creates the virtual network.
A full Layer 2 virtual switch (like VMware's vSwitch, Cisco Nexus 1000V and the OpenVSwitch) has its own security and mechanisms to support 802.3ad, 802.1q and other protocols used in today's switching networks.