[jimB0]

Here are some things:

One scale problem with layer 2 networks is you have to go to layer 3 at some point and you have an aggregation node(s) that have to do a considerable amount of ARP request/reply traffic. The request/reply traffic is handled by the CPU of the machine processing. This can run the CPU hotter than you really want and if the aggregation nodes are control plane policing ARP (most sw vendors do), they will intermittently drop arp requests.

Once the request/reply is processed, the node pushes the ARP entry into hardware. ARP hardware tables are limited resources as well. If you exceed them, traffic will either be black-holed or forwarded by the CPU of the node. Both of these are undesirable.

Additionally, it becomes difficult to scale forwarding capacity of layer 2 spanning tree (or loop free) based networks to greater than 2 aggregation nodes since you will either block ports or create loops.