[chris_marino]

> Just divide up whatever IP network you're using (e.g. 10/8) and make sure you allocate "enough" to each rack/whatever.

Easier said than done. Most datacenters are bit more deliberate about allocating addresses and hand them out in non-contiguous CIDRs. The VLAN mentality is still very prevalent. Getting a /20 at a time is pretty common.

Using overlapping IPs puts you right back into the overlay model.

>Assuming everything is nice and hierarchical, you can easily aggregate an entire rack to a single prefix.

Yes, exactly. The trick then becomes how to you ensure that endpoints that get created within the rack get an IP from the prefix? Romana (the project I work on) does this. It lets you capture your network topology for exactly this reason. This is especially important if/when you must filter routes at ToR.