Difference between layer-2 and layer-3 switches

Prerequisite – Network Devices
A switch is a device which sends a data packet in a local network. What is advantage over hub? A hub floods the network with the packet and only destination system receives that packet while others just drop due to which the traffic increases a lot. To solve this problem switch came into the picture. A switch first learns, by flooding network just like hub to fill MAC- address table, on which port a particular device is connected. After learning it sends packets to that particular host only. 

Layer 2 switch work on layer 2 of OSI model i.e. data link layer and sends a “Frames” to destination port using MAC address table which stores the mac address of a device associated with that port. Layer 3 switch work on layer 3 of OSI model i.e. network layer where it route packet by using IP address, it is used widely on VLANs.

Layer 2 Switch	Layer 3 Switch
Operate on layer 2 (Data link) of OSI model.	Operate on layer 3 (Network Layer) of OSI model.
Send “frames” to destination on the basis of MAC address.	Route Packet with help of IP address
Work with MAC address only	Can perform functioning of both 2 layer and 3 layer switch
Used to reduce traffic on local network.	Mostly Used to implement VLAN (Virtual Local area network)
Quite fast as they do not look at the Layer 3 portion of the data packets.	Takes time to examine data packets before sending them to their destination
It has single broadcast domain	It has multiple broadcast domain.
Can communicate within a network only.	Can communicate within or outside network.