How does Layer-2 Isolation work?

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When Layer-2 Isolation is enabled on a network, devices within the same Layer-2 domain (e.g., devices connected to the same switch) are isolated from each other. Any attempt of communication directly between devices at this layer is blocked. However, communication with devices in different Layer-2 domains is allowed.

More information: Differences between Intra-BSS Traffic Blocking and Layer-2 Isolation