OK so at work we are trying to do vlaning, but here is the catch the
whole network is flat... no routers (but one faceing outside) and no
subnets. So we are trying to do this without using an IP address for the
vlan interface, will that work?
To my knowledge since you there is no subnets and your network is just one whole flat network, you could have vlans just for that whole network but would it be worth it?
It depends on the switch. If the switch is L3 capable then you can create L3 vlan interfaces and then your clients can communicate. Alternatively if you had a router as well as a switch you could use the router to route between the vlans.
Vlans work at L2. A broadcast from a machine in a vlan will be received by all other machines within that vlan.
Generally speaking in an average network you would have multiple vlans. Each vlan would have it's own IP subnet eg.
vlan 10 -> 192.168.5.0/24
vlan 11 -> 192.168.6.0/24
each device in vlan 10 would have an IP address out of the 192.168.5.1 -> 254 range and each device in vlan 11 would have an IP address out of the 192.168.6.1 -> 254 range.
You would then on a L3 switch or router have a L3 interface for each vlan eg.
int vlan 10
ip address 192.168.5.1 255.255.255.0
int vlan 11
ip address 192.168.6.1 255.255.255.0
each client in vlan 10 would have it's default-gateway set to 192.168.5.1 and each client in vlan 6 192.168.6.1.
Usually client addresses are handed out via DHCP.
Just to reiterate - vlans are L2 concepts. For vlans to communicate they need a L3 device to route between them. This L3 device could be a router or a L3 switch.