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Scaling: a maximum of 4094 VLANs per datacenter is possible. This number is however a theoretical maximum. The actual number of VLANs that can be configured is often limited by the capabilities of the physical switches in the data center, as they need to maintain a distinct forwarding table for each VLAN.
Configuration complexity: VLAN information has to be consistently provisioned on all networking hardware
Broadcast containment: broadcasts within one VLAN causes needless flooding on links not using that VLAN
Flexibility: Since VLAN are terminated at layer-2, they do not allow to define virtual networks with span across different L2 broadcast domainsunless VLANs are allowed to transverse the aggregation and core layer of the data center, which can cause traffic "tromboning"domains.

References

draft-mahalingam-dutt-dcops-vxlan-04
VXLAN documentation in Linux kernel source

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