Although the OSI model will explain where the term layer 2 and layer 3 came from, it won't explain what layer 2 and layer 3 switches are. As previous posters stated, switches use layer 2 while routers use layer 3. But that's the standard switches we use which is now called layer 2 switches. Layer 3 switches, on the other hand, are newer switches that has hardware integrated routing functionality. Lacking the WAN capability of routers, it's specifically designed to improve local network performance.
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