I was thinking to separate this into 2 days. But, to understand undercloud better, I need to know what is overcloud. :)
Undercloud is the very basic setup and infrastructure that is required to setup the "cloud infrastructure" -- overcloud, to be used by consumer. It deploys and manages overcloud.
Red Hat OpenStack Platform (RHOSP) Director is the undercloud that that deploy and manage a complete overcloud infrastructure.
The overcloud, is the production cloud that is used to deploy VMs and containers to perform cloud workload.
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