VLANs are typically used to divide broadcast domains. We all know that broadcasts are part of the ethernet and TCP/IP standards and is used for ARP and DHCP, to name a few. Imagine having 200 or so users sharing a single broadcast domain (single VLAN), each broadcasting every few seconds. Even a 100Mbps LAN would easily be saturated on peak hours. Dividing the LAN into, say, four VLANs of about 50 users each, would lead to a more efficient use of bandwidth because broadcasts are never propagated beyond the VLAN it originated from. The downside is, you need some way to route traffic between VLANs. These days, inter-VLAN routing is easily done using Layer-3 switches.
Orlando Palomar Jr
CCIE# 11206, CCNP
CIPT Operations Specialist
Phil-Data Business Systems, Inc.