In the network world, north-south traffic is traditionally defined as client-to-server traffic. In Neutron, as it relates to distributed virtual routers, north-south traffic is traffic that originates from an external network to virtual machine instances using floating IPs, or vice versa.
In the legacy model, all traffic to or from external clients traverses a centralized network node hosting a router with floating IPs. With DVR, the same traffic avoids the network node and is routed directly to the compute node hosting the virtual machine instance. This functionality requires compute nodes to be connected directly to external networks through an external bridge – a configuration that up until now has only been seen on nodes hosting standalone or highly-available routers.