A LAN includes a router that is connected to two or more racks of servers and each of the servers can support a plurality of virtual machines. The router is configured to forward data packets based on IP destination addresses or based on destination MAC addresses and builds and maintains forwarding tables in support of data packet forwarding in the layer 3 and the layer 2 network environment. In support of layer 2 forwarding, the router builds and maintains an aggregated MAC switching table that is comprise of a subset of the table entries typically needed to switch packets to their destination, and in support of layer 3 forwarding, the router or switch builds and maintains an aggregated ARP forwarding table that is comprised of a subset of the table entries typically needed to forward packets to their destination.