I got into this discussion kind of late, but here's my take:

Functionally, you can configure either to do what you want.  But a 1 armed
router has a couple major limitations that a layer 3 switch doesn't.  A
layer 3 switch has ASICs (application specific integrated chip/circuit) that
can perform MAC re-writes, RIB/FIB lookups, rate-limiting, QOS, and ACL at
wire speed without bothering the CPU of the device.  A 1 armed router needs
to use the CPU for some of these functions, and will quickly become a
bottleneck after a certain level of traffic is passing through.  Also, a 1
armed router is limited by it's 1 arm :)  That link will be limited to 100
mb/sec (unless you move up to a 72xx or higher router, where gig is
possible).  So for instance if you're copying a large file between VLANs,
it'd be pretty easy to use up all the bandwidth of that 100 mbit full duplex
link, even if the CPU wasn't working hard on the 1 armed router.  Moving to
a layer 3 switch typically bumps that layer 3 device to layer 2 backplane a
multi-gigabit speed connection.  So if your traffic between vlans will ever
exceed 100 mbit, you can either shell out huge bucks for a 72xx, or get a
real QOS-friendly 3550 that is both faster and cheaper.  Of course if you
need WAN modules in the device that's another story.  I was sent this chart
a while ago listing speeds of various routers and switches:

> Router Performance Specs
>
> Router Switching Performance - Performance based on 64 Byte packets
>
> Platform    Process             Fast               Fast
>            Switching        Switching          Switching
>                                 (PPS)             (Mb/S)
> -------------------------------------------------------
> 1400          600            4,000          2,048,000
> 1600            600            4,000          2,048,000
> 1700          1,500            8,400          4,300,800
> 2500            800            4,400          2,252,800
> 261X          1,500           15,000          7,680,000
> 262X          1,500           25,000         12,800,000
> 265X          2,000           37,000         18,944,000
> 3620          2,000           40,000         20,480,000
> 3640          4,000           80,000         40,960,000
> 3660         12,000          120,000         61,440,000
> MC3810        2,000           10,000          5,120,000
> 4000          1,800           14,000          7,168,000
> 4500          5,000           40,000         20,480,000
> 4700          7,000           50,000         25,600,000
> 7120         13,000          175,000         89,600,000
> 7140         20,000          300,000        153,600,000
> 7200-NPE100   7,000          100,000         51,200,000
> 7200-NPE150  10,000          150,000         76,800,000
> 7200-NPE175   9,000          175,000         89,600,000
> 7200-NPE200  13,000          200,000        102,400,000
> 7200-NPE225  13,000          225,000        115,200,000
> 7200-NPE300  20,000          300,000        153,600,000
> 7200-NPE400  20,000          400,000        204,800,000
> 7200-NSE-1   20,000          300,000        153,600,000
> uBR-NPE150   10,000          100,000         51,200,000
> uBR-NPE200   13,000          150,000         76,800,000
> 7000-RP       2,500           30,000         15,360,000
> 7500-RSP2     5,000          220,000        112,640,000
> 7500-RSP4     8,000          345,000        176,640,000
> 7500-RSP8    22,000          470,000        240,640,000
> Cat 2948G-L3    N/A       10,000,000      5,120,000,000
> Cat 4908G-L3    N/A       12,000,000      6,144,000,000
> Cat 4232-L3     N/A        6,000,000      3,072,000,000
> Cat -RSM     14,000          175,000         89,600,000
> Catalyst-RSFC                170,000         87,040,000
> Catalyst-RSFC/NFFCII       2,000,000      1,024,000,000
> Catalyst-MSFC (IP,IPX)    15,000,000      7,680,000,000
> Catalyst-MSFC (Other)        170,000         87,040,000
> Catalyst-MSFC2 (IP,IPX)   15,000,000      7,680,000,000
> Catalyst-MSFC2 (Other)       680,000        348,160,000
> Catalyst-MSFC (X-bar)     30,000,000     15,360,000,000
>
> NOTE: VIP2 Distributed Switching significantly increases
> the performance on RSP platforms.


Chuck Church
CCIE #8776, MCNE, MCSE



>>>>Please advice if there are any difference in the
>>>
>>>functionalities etc. if I
>>>
>>>>use
>>>>
>>>>1) a L3 switch for routing between VLANs,
>>>>2) a L2 switch followed by a router for routing
>>>
> between VLANs.
>
>>>1) define "functionality"
>>>
>>>2) define "difference"




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