Using our pa firewall connected to our ISP modem (in bridge mode) its working fine. But I have a zone called guest that I want to have dhcp clients on that will be separate from my trust network. I want to be able to have those guests on DHCP from the Palo. Do I configure that guest interface as L3 or Vlan?
If it is small location where you don't have dedicated switch and you need multiple Palo physical interfaces to be in same subnet then it makes sense to use Layer 2.
Otherwise Layer 3 is always simpler and cleaner setup.
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