It adds security by isolation. It's not about encrypting traffic but isolating management from hosted services and splitting things in smaller DMZs.Interesting. Thus far, I've been avoiding VLANs in an attempt to keep things simple.
In my head (so far) VLANs are a management thing (separation of concerns style), as they don't seem to offer any additional security.
As far as I'm aware, putting something in a vlan doesn't make its traffic magically "invisible" to sniffing over the wire. aka it's not IPsec
The traffic is still as unencrypted as it was before, unless the traffic is independently encrypted in some form (https/ssh/ssl/etc).
Is that the wrong way to look at it?
You could also do that without VLANs, but then you need lots of additional NICs and switches if you want to isolate stuff physically.