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Maximum Transmission Unit (MTU) is the largest frame/packet that can be transmitted over frame/packet based networks. Large packets can carry more information, but the processing time can take longer. Small packets are processed faster, but more need to be sent to transfer the same amount of data as a single large packet. MTU, therefore, is the optimal packet size for a given network.
MTUs are also very important for the routing of data within a network. If the packet size is too large to handle, then the router will keep trying again and again to send. This ultimately leads to the failure of network because the router is unable to deal with other network traffic. A smaller packet size isn't an ideal solution either. The small packets always leave the room in their header and other overhead information that obviously wastes the space of a packet.