For the meaning about Link Aggregation, please refer to Wikipedia: http://en.wikipedia.org/wiki/Link_aggregation
The following article were quoted from http://www.linuxhorizon.ro/bonding.html
Load Balance (mode=0, balance-rr)
Round-robin policy: Transmit packets in sequential order from the first available slave through the last. This mode provides load balancing and fault tolerance.
Failover (mode=1, active-backup)
Active-backup policy: Only one slave in the bond is active. A different slave becomes active if, and only if, the active slave fails. The bond's MAC address is externally visible on only one port (network adapter) to avoid confusing the switch. This mode provides fault tolerance. The primary option affects the behavior of this mode.
Balance-XOR (mode=2, balance-xor)
XOR policy: Transmit based on [(source MAC address XOR'd with destination MAC address) modulo slave count]. This selects the same slave for each destination MAC address. This mode provides load balancing and fault tolerance.
802.3ad (mode=4, 802.3ad)
IEEE 802.3ad Dynamic link aggregation. Creates aggregation groups that share the same speed and duplex settings. Utilizes all slaves in the active aggregator according to the 802.3ad specification.
1. Ethtool support in the base drivers for retrieving the speed and duplex of each slave.
2. A switch that supports IEEE 802.3ad Dynamic link aggregation.
Most switches will require some type of configuration to enable 802.3ad mode.
Balance-TLB (mode=5, balance-tlb)
Adaptive transmit load balancing: channel bonding that does not require any special switch support. The outgoing traffic is distributed according to the current load (computed relative to the speed) on each slave. Incoming traffic is received by the current slave. If the receiving slave fails, another slave takes over the MAC address of the failed receiving slave.
Prerequisite: Ethtool support in the base drivers for retrieving the speed of each slave.
Balance-ALB (mode=6, balance-alb)
Adaptive load balancing: includes balance-tlb plus receive load balancing (rlb) for IPV4 traffic, and does not require any special switch support. The receive load balancing is achieved by ARP negotiation. The bonding driver intercepts the ARP Replies sent by the local system on their way out and overwrites the source hardware address with the unique hardware address of one of the slaves in the bond such that different peers use different hardware addresses for the server.
For example, if you want to setup 802.3ad, just enable the option "802.3ad", and connect both WAN and LAN to your switch. Be sure your switch supports 802.3ad, or it may not work.
keyword: link aggregation 802.3ad load balance
The following article were quoted from https://help.ubuntu.com/community/UbuntuBonding
The xmit_hash_policy (POLICY) option default value at Layer 2:
layer2 Uses XOR of hardware MAC addresses to generate the hash. This algorithm will place all traffic to a particular network peer on the same slave.
layer2+3 Uses XOR of hardware MAC addresses and IP addresses to generate the hash. This algorithm will place all traffic to a particular network peer on the same slave.
layer3+4 This policy uses upper layer protocol information, when available, to generate the hash. This allows for traffic to a particular network peer to span multiple slaves, although a single connection will not span multiple slaves.
encap2+3 This policy uses the same formula as layer2+3 but it relies on skb_flow_dissect to obtain the header fields which might result in the use of inner headers if an encapsulation protocol is used.
encap3+4 This policy uses the same formula as layer3+4 but it relies on skb_flow_dissect to obtain the header fields which might result in the use of inner headers if an encapsulation protocol is used.