A Virtual LAN (VLAN) is a network configuration that allows multiple distinct networks to exist on the same physical hardware. By grouping devices into a VLAN, network administrators can improve security and performance by isolating traffic. This means that devices in one VLAN cannot directly communicate with devices in another VLAN without a router. VLANs are commonly used in organizations to segment networks based on departments or functions, such as separating the finance team from the marketing team. This segmentation helps manage bandwidth and enhances security by limiting access to sensitive information within specific groups.