When configured correctly, an Etherchannel lets you add more bandwidth to your network by bundling several physical ports together into one logical interface. It also provides redundancy in case a link fails. This is important, especially when it comes to that 4 a.m. moment when someone calls and says that a cable or interface is down.
The overall benefit of Etherchannel is that a single logical link appears to the routing protocols as one high-speed path between two switches. This makes it possible to send traffic over the bundle with less packet loss, which can improve performance for applications that require high throughput.
Another benefit is that aggregation of multiple links eliminates the need for Spanning Tree Protocol recalculation for each individual port in the bundle. This can save time, especially in large networks where STP recalculations can take minutes to complete.
In addition to offering greater bandwidth and redundancy, the etherchannel technology provides the ability to load balance traffic among the physical links in the bundle. This can be done using a number of different methods. The two most common are source and destination MAC address and IP addresses, or Layer 4 port numbers.
You can choose which load-balancing method to use for an etherchannel with the global configuration command port channel load-balance. The default on most Catalyst switches is src-dst-mac, which distributes traffic over the same MAC address in each bundle. However, other options are available for more balanced traffic distribution. Some of these include per-prefix load balancing, which uses the route prefix in each frame.