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What does a transit gateway do in the context of a VPC?

  1. Functions as an external internet firewall

  2. Acts as a "cloud router" connecting multiple VPCs

  3. Provides encryption for data in transit

  4. Manages physical server resources

The correct answer is: Acts as a "cloud router" connecting multiple VPCs

A transit gateway serves a crucial role in the context of a Virtual Private Cloud (VPC) by acting as a centralized hub or "cloud router" that enables communication between multiple VPCs, on-premises networks, and even other AWS services. This functionality is particularly beneficial in complex environments where you might have numerous VPCs that need to communicate with each other seamlessly. By utilizing a transit gateway, network traffic can be routed efficiently through a single point, streamlining the process and simplifying network management. It not only reduces the complexity involved in connecting multiple networks but also scales easily as businesses grow or change their network architecture. The other options do not align with the primary function of a transit gateway: external internet firewalls focus on security but not on routing, while data encryption in transit relates to data protection rather than routing capabilities. Managing physical server resources is related to infrastructure management, not the specific role of a transit gateway within a cloud networking framework.