What term describes a service that allows multiple customers to share the same physical link while maintaining separate logical connections?

Service multiplexing is the correct term that describes a service allowing multiple customers to share the same physical link while maintaining separate logical connections. This process is essential in Carrier Ethernet networks, where efficient use of bandwidth and resources is critical.

By using service multiplexing, network operators can ensure that different customers' traffic remains isolated from each other, even though they share the same physical infrastructure. This isolation is key to achieving a level of security and quality of service (QoS) that each customer expects. The logical connections can be over different virtual LANs (VLANs) or through encapsulation methods, allowing multiple services to coexist without interference.

This allows operators to maximize the utilization of expensive physical infrastructure while providing reliable and robust services to each customer, which is a fundamental aspect of modern networking, especially for Ethernet services.