RouteBased VPNs were previously called dynamic routing gateways in the classic deployment model. RouteBased VPNs use "routes" in the IP forwarding or routing table to direct packets into their corresponding tunnel interfaces. The tunnel interfaces then encrypt or decrypt the packets in and out of the tunnels. The policy (or traffic selector) for RouteBased VPNs are configured as any-to-any (or wild cards). The value for a RouteBased VPN type is RouteBased.
To understand it easily when you are creating S2S(IPSec) vpn to on-prem or other cloud you create local network gateway to feed in the ranges that works as routes. Consider this same as that it's just under the hood MS is taking care for you but underlying tech is same it's connection between 2 gateways.
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