VLAN - Virtual Local Area Network
Virtual Local Area Network is a group of computers that are "logically" not physically connected together to form a LAN. VLAN offers such a flexibility, where computer systems could easily communicate with each other even if they does not belong to the same LAN "physically". A typical Virtual LAN may spread across a wide area despite of its physical distribution.
A virtual LAN could be created with the help of a network switch or a router. VLANs basically define the broadcast domain at layer 2. Each port on a network device could only have a single VLAN connected to it. So, the number of VLANs could be limited by the number of physical ports on a network switch or a router.
Using VLANs, computers on different floors of a building or may be in a completely different building in different area of the city, could now belong to the same LAN. It offers great flexibility, security and scalability with the ease of management for network administrators.