Lets consider there is a big gathering and they are all talking. It will be impossible for them to communicate with each other. Now if we move them into reasonable sized rooms. Say the rooms are named as Red-Room, Orange-Room, Green-Room. Now as the number of people in the rooms are reduced such that what ever they say can be heard by everyone in the room. In addition we have similar labelled rooms on every floor of the building and they are interconnected with same colored rooms i.e. Red-Room at all the floors are interconnected such that any one talking in Red-room at ground floor can be heard by all other Red-rooms on other floors and vice-versa. So we have created smaller rooms where people can communicate without yelling at each other. It offers security, such that you can keep like minded / security conscious discussions in a particular colored room. Likewise VLAN provides a boundary around the network such that a computer which is part of VLAN can communicate with other computers on the same vlan irrespective of the floor it is at, it is its broadcast boundary. It offers security, so that you can keep all the servers in a vlan with similar security requirement and all the end users in another vlan with other security requirements.
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