At DigitalOcean, they initially offered a simple networking solution with public interfaces and v4 addresses that were publicly routable on the internet, but as they scaled, this simplicity created performance and reliability challenges due to issues such as IPv4 address scarcity and scalability limitations of layer-2 networking. To address these challenges, they adopted a software-defined networking (SDN) approach using label switching in conjunction with a layer-3 protocol like BGP, which allowed them to work around hardware limitations while achieving a routed solution for their public Droplet networking, resulting in reduced broadcast and unknown unicast traffic processing, improved CPU stability, and minimal disruption to customers.