We define the Maximum Transmission Unit [MTU] on Tunnel/Routing interface so that packets greater that limit be fragmented or dropped before they are encapsulated.
Ethernet switch ports have MTU as well. Ethernet frame is data + L2 header incl. checksum and ranges from 64 bytes to 1518 bytes. GE ethernet supports jumbo packets of 9k bytes. So GE switch can support jumbo frames upto around 9,000 bytes. If not configured to accept baby giants/jumbo even switch would drop larger frames.
Data doesn't ride on the link all alone. There are packet header overheads, inter-packet delays etc. at works. Larger the MTU, lower the overhead more the throughput. 10Mbps link can transfer 10Mega bits per seconds or 1.25 MB/sec. Also, MTU/packet size is not the only criteria for filling up the data pipe to its limits.
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