This question comes up on almost every network refresh: does this switch need to route, or just switch? Here's how to think through it.
What Layer 2 switching does
A Layer 2 switch forwards traffic based on MAC addresses within a single broadcast domain (VLAN). It's simple, fast, and cheaper — and it's all that most access-layer closet switches need to do, since their job is connecting end devices (phones, access points, workstations) back to an uplink.
What Layer 3 switching adds
A Layer 3 switch can route traffic between VLANs and subnets in hardware, without sending that traffic to a separate router. This matters once your network has multiple VLANs that need to talk to each other at speed — voice, data, and guest networks, for example — without bottlenecking through a single router.
A simple way to decide
Choose Layer 2 for access-layer closet switches whose only job is connecting end devices to a single uplink, with inter-VLAN routing handled elsewhere (a core switch or firewall).
Choose Layer 3 for distribution or core switches that need to route between VLANs locally, for sites with multiple VLANs that generate meaningful inter-VLAN traffic, or where you want routing resilience that doesn't depend on a single router staying up.
A common mistake
Buying Layer 3 switches for every closet "to be safe" is a common way to overspend. Layer 3 capability costs more per port and is rarely used if the switch is only ever handling single-VLAN access traffic. Reserve the Layer 3 spend for where routing actually happens — usually one or two switches per site, not all of them.
Mixed designs are normal
Most real networks use both: Layer 2 access switches at the edge, feeding into a Layer 3 distribution or core switch that handles inter-VLAN routing. That combination gets you simple, cheap access ports and centralized routing control, without paying Layer 3 pricing on every closet switch.