It’s a way to divide a network kind of like a hard drive partition. If you’re a store that has wifi for the customers you don’t want your public wifi to be on the same network as your credit card machines are on, you also don’t want your wifi thermostat to be on the same network as well. So you create an seperate network for each of those and you don’t allow them to talk to each other even though they are connected to the same switch or router.
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