What are the modes in which interfaces on Palo Alto can be configured?

When configuring the Ethernet ports on your firewall, you can choose from virtual wire, Layer 2, or Layer 3 interface deployments. In addition, to allow you to integrate into a variety of network segments, you can configure different types of interfaces on different ports. The following sections provide basic information on each type of deployment.

-Virtual Wire Deployments
-Layer 2 Deployments
-Layer 3 Deployments

Virtual Wire Deployments
In a virtual wire deployment, the firewall is installed transparently on a network segment by binding two ports together. By using a virtual wire, you can install the firewall in any network environment without reconfiguring adjacent devices. If necessary, a virtual wire can block or allow traffic based on the virtual LAN (VLAN) tag values. You can also create multiple subinterfaces and classify traffic according to an IP Address (address, range, or subnet), VLAN, or a combination of the two.
By default, the virtual wire (named default-vwire) binds Ethernet ports 1 and 2 and allows all untagged traffic. Choose this deployment to simplify installation and configuration and/or avoid configuration changes to surrounding network devices.
A virtual wire is the default configuration, and should be used only when no switching or routing is needed. If you do not plan to use the default virtual wire, you should manually delete the configuration before proceeding with interface configuration to prevent it from interfering with other interface settings you define.

Layer 2 Deployments
In a Layer 2 deployment, the firewall provides switching between two or more interfaces. Each group of interfaces must be assigned to a VLAN object in order for the firewall to switch between them. The firewall will perform VLAN tag switching when Layer 2 subinterfaces are attached to a common VLAN object. Choose this option when switching is required.

Layer 3 Deployments
In a Layer 3 deployment, the firewall routes traffic between ports. An IP address must be assigned to each interface and a virtual router must be defined to route the traffic. Choose this option when routing is required.
You must assign an IP address to each physical Layer 3 interface you configure. You can also create logical subinterfaces for each physical Layer 3 interface that allows you to segregate the traffic on the interface based on VLAN tag (when VLAN trunking is in use) or by IP address, for example for multi-tenancy.
In addition, because the firewall must route traffic in a Layer 3 deployment, you must configure a virtual router. You can configure the virtual router to participate with dynamic routing protocols ( BGP, OSPF, or RIP) as well as adding static routes. You can also create multiple virtual routers, each maintaining a separate set of routes that are not shared between virtual routers, enabling you to configure different routing behaviors for different interfaces.