Rate limit OR traffic shaping

Rate limit or shaping is always confusing; as to which one to use.

• The goal of traffic shaping is hard-limiting of sending rate, while the purpose of rate-limiting is usually admission control based on burst sizes.
• Traffic shaping hard-forces “fixed” sending rate, absorbing and smoothing incoming packet bursts.
• Rate-limit never smoothes but propagates incoming bursts, up to the limit allowed.
• Rate-limiting drops (or marks) exceeding traffic, while traffic shaping queues and delays packets.

This dropping behavior has serious implications on TCP-based applications, like you would never see 256Kbps for TCP flows with your configuration.Traffic-shaping is much more resource-consuming procedure, than rate-limiting. Traffic-shaping is based on leaky-bucket algorithm (time-quantum based), while rate-limiting uses token-bucket (continuous flow). Therefore traffic-shaping changes timing behavior of the flow (jitter, delay) whilte rate-limiting does not.