Layer 3 switch are almost same as a router with following differences
Layer 3 switch is optimized to data as fast as layer2 switch but it makes the decision on how to transmit traffic at layer 3 (just like a router)

Perfect in Lan environment as it is built on switching hardware. Another thing is it is faster than a router in LAN environment. Layer 3 use route once switch many policy. It means when it search for specific destination using a routing table, it creates a cache entry in a switch RAM. So next time it does not have to search again for a routing table for same source and destination address. It also picks up hop information from cache.
So you can say that Layer 3 switch has the ability to reprogram the hardware dynamically with the current Layer 3 routing information. That is why it is faster than a router.

To be frank many of Cisco’s layer 3 switch’s are actually routers

Layer 3 switch good for LAN

Routers good for WAN

Router has some advanced routing functionality which is not available in Layer 3 switch at all.

For more info see: http://www.foundrynet.com/services/f...ingRouter.html

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