With the development of data centers, a large number of services are deployed on virtual machines (VMs). The original VLAN isolation solution cannot achieve isolation between so many VMs. VXLAN uses VXLAN Network Identifiers (VNIs) to provide a larger range than VLAN IDs, so that a larger number of VMs can be isolated.

The statement is correct. The 12-bit VLAN ID field in the 802.1Q standard limits the number of unique VLANs to 4094. This is insufficient for large-scale, multi-tenant cloud data centers where tens of thousands of isolated tenant networks may be required. VXLAN addresses this limitation by using a 24-bit VXLAN Network Identifier (VNI), which supports up to 16 million unique logical networks, providing the necessary scale for modern virtualized environments.
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1. Huawei

"HCIA-Datacom V1.0 Training Material"

Module "VXLAN Technology". This courseware explicitly states

"The 12-bit VLAN ID defined in IEEE 802.1Q can identify only a maximum of 4094 VLANs... VXLAN uses a 24-bit VNI to identify up to 16 million tenants."

2. IETF RFC 7348

"Virtual eXtensible Local Area Network (VXLAN): A Framework for Overlaying Virtualized Layer 2 Networks over Layer 3 Networks"

Section 1. Introduction. The RFC states

"The VLAN ID is 12 bits long

which limits the number of VLANs to 4096. This is a small number for a service provider that may be supporting thousands of customers." It then introduces the 24-bit VNI as the solution.