802.1q (also known as dot1q) is an IEEE industry standard trunking protocol. Cisco switches supports both ISL (Inter Switch Link - Cisco propietory) and 802.1q.The IEEE 802.1Q standard defines the operation of VLAN Bridges that permit the definition, operation and administration of Virtual LAN topologies within a Bridged LAN infrastructure. The 802.1Q standard is intended to address the problem of how to break large networks into smaller parts so broadcast and multicast traffic would not grab more bandwidth than necessary. The standard also helps provide a higher level of security between segments of internal networks.
The key for the IEEE 802.1Q to perform the above functions is in its tags. 802.1Q-compliant switch ports can be configured to transmit tagged or untagged frames. A tag field containing VLAN (and/or 802.1p priority) information can be inserted into an Ethernet frame. If a port has an 802.1Q-compliant device attached (such as another switch), these tagged frames can carry VLAN membership information between switches, thus letting a VLAN span multiple switches. However, it is important to ensure ports with non-802.1Q-compliant devices attached are configured to transmit untagged frames. Many NICs for PCs and printers are not 802.1Q-compliant. If they receive a tagged frame, they will not understand the VLAN tag and will drop the frame. Also, the maximum legal Ethernet frame size for tagged frames was increased in 802.1Q (and its companion, 802.3ac) from 1,518 to 1,522 bytes. This could cause network interface cards and older switches to drop tagged frames as "oversized."
802.1q adds a 4-Byte header to the frame indicating the VLAN (Virtual LAN) membership as compared to ISL which encapsulates (adds header and trailer) to the frame.
How 802.1q Works
You first designate a port as a trunk port and then decide upon trunking protocol(ISL or dot1q), in mentioned below example interface used for trunking is Fast Ethernet port 0/1.