Answer- Product & Software: This article applies to Aruba Instant OS 4.1 and above.
Local - In this mode, the DHCP server for local branch network is on the master AP (Virtual Controller), which also acts as the gateway for the client. In this mode, all client traffic is NAT’ed out on the master AP either through the tunnel IP (Corp traffic, if routing profile is defined) or through its uplink IP (Non Corp traffic).
Local,L2 - In this mode, the master AP (Virtual Ccontroller) acts as a DHCP server and the gateway located outside the IAP. When Local, L2 DHCP scope is selected, client traffic is bridged out of the IAP and there is no NAT/Routing. This was specifically designed to solve a customer use-case where they wanted the IAP to act as a DHCP server and gateway had to be on the upstream network for some external content filtering solution.
Local, L3—In this mode, the master AP (Virtual Controller) acts as a DHCP server and gateway and also routes the traffic. The only difference between this and Local mode is that there is no NAT’ing of traffic.