TechInfoDepot:DD-WRT/VLAN

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Virtual LAN @ Wikipedia

A virtual local area network, virtual LAN or VLAN, is a group of hosts with a common set of requirements that communicate as if they were attached to the same broadcast domain, regardless of their physical location. A VLAN has the same attributes as a physical local area network (LAN), but it allows for end stations to be grouped together even if they are not located on the same network switch. LAN membership can be configured through software instead of physically relocating devices or connections.

To physically replicate the functions of a VLAN, it would be necessary to install a separate, parallel collection of network cables and equipment which are kept separate from the primary network. However unlike a physically separate network, VLANs must share bandwidth; two separate one-gigabit VLANs using a single one-gigabit interconnection can both suffer reduced throughput and congestion. It virtualizes VLAN behaviors (configuring switch ports, tagging frames when entering VLAN, lookup MAC table to switch/flood frames to trunk links, and untagging when exit from VLAN.)