802.1q in 802.1q, or '802.1q Tag Stacking' as it is more well known, is a fairly new feature found on the larger Cisco Catalyst series (3750 Metro series, 6000 series, 7000 series and above).
The purpose of 802.1q Tag Stacking is to allow, as you correctly noted, a 802.1q frame within a 802.1q fame. This essentially allows large ISP's to create L2 VPN's and also create transparent LANs for their customers, connecting two or more customer LAN points through this technique without complicating things on the client's side.
I personally haven't seen this implemented, but I'm sure its a feature that will only remain on Cisco's largest models for the obvious reasons.
Hi chris nice explanation .....i too want add my points to u r explanation ....hope it will not confuse ppl !!
I have worked in this field ...this feature is an optional thing in layer 2 vlan aware switches .
It is highly useful to hide the confidential data of (vlan aware) customer switches with another vlan tag in provider Bridges and switch it through vlan aware provider Bridges.
Provider bridges are not aware that the packet received by them are already tagged !
So the layer 2 packet when captured using any packet capturing software like ethereal it will show 2 tag ...one being customer tag and other being provider vlan tag !
I personally have seen this implementation ...and this is part of many layer 2 switches available in the market !