OADM stands for optical add/drop multiplexer. This is a type of degree-2 optical node, which is generally used for the construction of a ring-based optical transport network.

An OADM consists of three stages, namely, optical demultiplexer, optical switch or add/drop stage, and optical multiplexer. Optical demultiplexer functions to separate wavelengths in an inlet fiber onto individual fibers. These fibers are then either dropped, connected to 2x2 optical switches, or directly connected to optical multiplexer. The last stage is optical multiplexer which functions to multiplex all those wavelengths either added, directly from optical demultiplexer, or 2x2 optical switches, into an outlet fiber. 

All the lightpaths that directly pass an OADM are termed cut-through lightpaths, while those lightpaths added/dropped at the OADM node termed added/dropped lightpaths. In addition, depending on whether 2x2 optical switches are deployed in the middle stage, OADM can be further classified into reconfigurable OADM if optical switches are deployed, or fixed OADM if everything is not reconfigurable.

Physically, there are several ways to realize an OADM. One can use the traditional demultiplexer and multiplexer architecture to realize an OADM, or use a combination of fiber grating and optical circulators to realize an OADM. 

Although both have add/drop functionality, OADM is generally different from ADM. The former functions in the optical domain under WDM technique, while the latter is implicitly considered to functions in the traditional SDH/SONET networks.

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