Techniques for using more-specific routing to perform scalable Layer-2 (L2) stretching of subnets across hybrid-cloud environments. Routing tables in a public cloud may allow for routes that are more specific than the default local route, and the more-specific routes may be used to send all traffic to a dedicated, cloud router. The more-specific routes are set up for a VPC where a subnet resides such that the more specific-routes cover at least a portion of subnet range. The next hop for the more-specific routes point to the cloud router which is capable of doing host routing and segmentation extension. Thus, traffic originating from endpoints in a VPC is routed to the cloud router, and the cloud router determines whether the traffic is to be re-routed back to a destination endpoint in the VPC (or another cloud location), or sent to a destination endpoint residing in the on-premises site.