PPPoE stands for Point-to-Point Protocol over Ethernet. It is a protocol that encapsulates PPP frames in Ethernet frames and sends them to the link’s remote end. The other way around, data received on the local end of the connection must be de-encapsulated before being passed up to PPP.
The name derives from its original use: connecting two points through an ethernet network using the point-to-point protocol (PPP), which defines how data are transmitted between computers across a telephone line or other connection. However, it has been expanded to include connections through DSL lines and wireless networks such as WiMAX and cellular networks like 3G/4G and LTE. The term bridging is also used to describe PPPoE.
The most common use for PPPoE is when connecting a computer or other client device directly to an Internet service provider (ISP) via DSL or cable modem. In this circumstance, the user’s computer is usually assigned an IP address and DNS servers by the ISP. To transmit data across the connection, some method must be used to encapsulate the PPP frames inside Ethernet frames – i.e., convert them from being PPP packets into being Ethernet packets. This encapsulation process occurs at Layer 2 of the OSI model, defined in RFC 2516 as “PPPoE with Credit Flow Control.”