Flannel is a layer 3 network fabric designed for Kubernetes that provides overlay networking between hosts. It runs a flanneld agent on each node to allocate subnet leases from a preconfigured address space using either Kubernetes API or etcd for storage. Traffic is forwarded via pluggable backend mechanisms including VXLAN, UDP, IPsec, host-gw, WireGuard, and cloud-specific integrations like Tencent VPC. The architecture separates concerns into backend management, subnet allocation, traffic management (iptables/nftables), and routing, with a plugin system enabling extensibility. Key entry points include the main daemon (main.go), backend registration system, subnet watchers, and traffic manager interfaces. The system handles IP address allocation, encapsulation, decapsulation, and traffic masquerading to enable pod-to-pod communication across nodes in a cluster.