A is right - B would be right if it stated "It allows VXLAN to be applied as a network virtualization overlay though encapsulation". but it doesn't it states "It allows LISP to be applied as a network virtualization overlay though encapsulation.".
Locator ID Separation Protocol (LISP) solves this issue by separating the location and identity of a device through the Routing locator (RLOC) and Endpoint identifier (EID):
+ Endpoint identifiers (EIDs) – assigned to end hosts.
+ Routing locators (RLOCs) – assigned to devices (primarily routers) that make up the global routing system.
Ref: LISP Network Deployment and Troubleshooting: The Complete Guide to LISP Implementation on IOS-XE, IOS-XR, and NX-OS
“Chapter 1
LISP Architecture
…
LISP Architecture
The purpose of LISP is to separate the location from the identity. In simple words, with LISP, where you are (the network layer locator) in a network that can change, but who you are (the network layer identifier) in the network remains the same. LISP separates the end user device identifiers from the routing locators used by others to reach them. The LISP routing architecture design creates a new paradigm, splitting the device identity—that is, the endpoint identifier (EID)—from its location—that is, the routing locator (RLOC).
…”
A. It creates two entries for each network node, one for its identity and another for its location on the network.
Correct answer.
B. It allows LISP to be applied as a network virtualization overlay though encapsulation.
Wrong answer.
C. It allows multiple instances of a routing table to co-exist within the same router.
Wrong answer.
D. It creates head-end replication used to deliver broadcast and multicast frames to the entire network.
Wrong answer.
LISP can be applied as a network virtualization overlay through encapsulation, but Cisco's SD-Access uses VXLAN.
Are RLOC and EID two separate entries? Or are they one mapped entry?
VXLAN is an Overlay Encapsulation, I would go for B, not the specific detail of A
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