A network protocol that encapsulates packets at a peer level or below. It is used to transport multiple protocols over a common network as well as provide the vehicle for encrypted virtual private networks (VPNs). It is said to "tunnel" because it "pushes through" packets of different types. A tunneling protocol is also called an "encapsulation protocol," which is ambiguous naming, because many network protocols encapsulate.

Encapsulate Same or Lower Layer
In a regular protocol, the lower layer protocol encapsulates packets from the higher level protocol. For example, a network layer 3 packet encapsulates a transport layer 4 packet, and a data link layer 2 packet encapsulates a network layer 3 packet.

In contrast, a tunneling protocol encapsulates a packet of the same or lower layer. For example, generic routing encapsulation (GRE) can contain a layer 3 IPX packet within a layer 3 IP packet. A virtual private LAN service (VPLS) encapsulates a layer 2 Ethernet frame within a layer 3 IP packet. See IP tunneling, L2TP, GRE and VPLS.