This mode is generally also the default gateway for devices on the LAN
Client traffic to the internet has the source IP rewritten to match the WAN IP of the appliance
DHCP services can be configured on the MX appliance
Passthrough Mode:
The MX appliance acts as a layer 2 bridge
VLANs cannot be configured
No address translation is provided
This mode is not recommended at the network perimeter
This question is related to the topic of MX Addressing and VLANs in the Cisco Meraki documentation. You can find more information about this topic in the MX Addressing and VLANs article or the General MX Best Practices page.
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