Integrated Routing and Bridging (IRB)

In order for a VLAN to span a router, the router must be capable of forwarding frames from one interface to another, while maintaining the VLAN header. If the router is configured for routing a Layer 3 (network layer) protocol, it will terminate the VLAN and MAC layers at the interface a frame arrives on. The MAC layer header can be maintained if the router is bridging the network layer protocol. However, regular bridging still terminates the VLAN header. Using the IRB feature in Cisco IOS^® Release 11.2 or greater, a router can be configured for routing and bridging the same network layer protocol on the same interface. This allows the VLAN header to be maintained on a frame while it transits a router from one interface to another. IRB provides the ability to route between a bridged domain and a routed domain with Bridge Group Virtual Interface (BVI). The BVI is a virtual interface within the router that acts like a normal routed interface that does not support bridging, but represents the comparable bridge group to routed interfaces within the router. The interface number of the BVI is the number of the bridge group that the virtual interface represents. The number is the link between the BVI and the bridge group.
When you configure and enable routing on the BVI, packets that come in on a routed interface, which are destined for a host on a segment in a bridge group, are routed to the BVI. From the BVI, the packet is forwarded to the bridging engine, which forwards it through a bridged interface. This is forwarded based on the destination MAC address. Similarly, packets that come in on a bridged interface, but are destined for a host on a routed network, first go to the BVI. Next, the BVI forwards the packets to the routing engine before it sends them out of the routed interface. On a single physical interface, the IRB can be created with two VLAN sub-interfaces (802.1Q tagging); one VLAN sub-interface has an IP address that is used for routing, and the other VLAN sub-interface bridges between the sub-interface used for routing and the other physical interface on the router.
Since the BVI represents a bridge group as a routed interface, it must be configured only with Layer 3 (L3) characteristics, such as network layer addresses. Similarly, the interfaces configured for bridging a protocol must not be configured with any L3 characteristics.

Ref:Understanding and Configuring VLAN Routing and Bridging on a Router Using the IRB Feature