Configuring IP-in-IP
If your network fabric performs source/destination address checks and drops traffic when those addresses are not recognized, it may be necessary to enable IP-in-IP encapsulation of the inter-workload traffic.
This is often the case for public-cloud environments where you have limited control over the network, and in particular you have no option to set up BGP peering between your Calico nodes and the network routers.
Calico can be configured to use IP-in-IP encapsulation by enabling the IPIP option on the IP pool resource. When enabled, Calico will use IP-in-IP encapsulation when routing packets to workload IPs falling in the IP pool range.
An optional mode
field toggles when IP-in-IP is used, see following sections for details.