Roll ups

Bundling is a second layer solution to scaling on a blockchain. In bundling, a local node stands between users and the block producers, combining several individual transactions into a single transaction subsequently sent to the blockchain.

Brokerage analogy

A broker is a second layer to the stock market, like the lightning network is a 2nd layer for bitcoin. A broker takes orders for buying and selling stocks, but doesn't make a separate transaction with the stock market for each order. They bundle their orders together and make a single transaction.

As an example, suppose the broker gets 75 purchase orders for 1 stock each of Apple, and 50 sell orders for 1 stock each of Apple. Then the broker can bundle those orders together, and just make one single transaction at the end of the day, purchasing 25 stocks. In this example, bundling makes the transaction costs collapse from 125 to 1.

The same thing works with banking, where the local banks bundle the withdrawals (including loans) and deposits together and settle the difference at the end of the day with a Federal Reserve Bank for the difference.

Thus 2nd layer solutions on blockchains are variously referred to as brokerage, banking, or especially, bundling.