At what levels Load balancers works ?

Load Balancers may act at different levels :

1. Link level - Link LB

• Chooses what network link to send a packet to.
• Acts at the packet level.
  Installed on the normal path of the traffic and divert it according to the configuration.
• 1-to-1 relation between input and output packets
• usually implemented in hardware (ASICs) allowing to reach line rate
• Return traffic doesn't necessarily pass through the LB.
  The LB may also replace the packets' source address with its own in order to force the return traffic to pass through it

2. Network level - Network LB

• Chooses what route a series of packets will follow.
• Acts on session contents.
  Operations are always stateful. Return traffic must pass through the LB. 
• Generally performed by proxies and they're often called Layer 7 LB or L7Clients and servers are not required to use the same protocol (for example IPv4 vs IPv6, clear vs SSL). No relation between input and output packets sizes nor counts.
• Generally achieved by pure software, even if embedded into hardware appliances. 
• Very well suited for server load balancing

3. Server level - Server LB

• decides what server will process a connection or request.
• Proxy-based LB are deployed as a server with their own IP address and ports. 
• Some LB may have to adjust some servers' responses to make this possible (eg: the HTTP Location header field used in HTTP redirects).