Chapter 11—which is dedicated to Network Virtualization Overlays (NVO)—described a modern paradigm for the integration of virtual machines (VMs), containers, and bare-metal servers in a (private, public, or telco) cloud. The resulting overlay provides connectivity between subscribers and VMs, or between different VMs. The latter are typically servers, which behave like IP endpoints. Subscribers also behave like IP endpoints, therefore a typical service example would be a TCP session between a subscriber client and a VM acting as a database server (or a web server) in the cloud.
Network Function Virtualization (NFV) takes advantage of NVO by allowing VMs (or containers) to actually perform a network service function. These VMs are typically in-line and instead of acting as communication endpoints, they are transit devices, with a left and a right interface. There are many examples of such network service functions: stateful firewalling, Network Address Translation (NAT), load balancing, Distributed Denial-of-Service (DDoS) detection and mitigation, Deep Packet Inspection (DPI), Intrusion Detection and Prevention (IDS/IDP), IPSec/TLS tunnel termination, proxy functions, and so on.
Throughout this chapter, every time you see the term VM, you can think of either a VM or a container. Network functions can be implemented on any of these virtual compute entities (and on physical devices, too).
Depending on the actual service provided ...