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How The OSI Works

Diagram of the OSI Model
Refer to it as you read the 'Step-by-Step' section below,

HOW THE OSI MODEL WORKS - STEP BY STEP
  1. Network-capable Applications produce DATA.
  2. Each layer in the OSI Model adds its own information to the front of the data it receives from the layer above it. This information in front of the data is called a header and contains information specific to the protocol operating at that layer. The process of adding the header is called encapsulation. Encapsulated data is transmitted in Protocol Data Units(PDUs). There are Presentation PDU's, Session PDU's, Transport PDU's etc. Thus, PDU's from an upper layer are encapsulated inside the PDU of the layer below it.
  3. PDU's are passed down through the stack of layers (called 'the stack' for short) optionally repeating the encapsulation process until they can be transmitted over the Physical layer. The physical layer is the wire connecting all the computers on the network.
  4. The OSI standards specify that a layer on host #1 speaks the same language as the same layer on host #2 or any other host on the network. Thus, all hosts can communicate via the Physical layer. This communication between layers is represented by the  symbols in the diagram above. For example, the Transport layer on Host 1 should speak the same language as the Transport layer on Host 2.
  5. DATA passed upwards is un-encapsulated before being passed further up (represented by the colored brackets [[[[[[ ).
  6. All information is passed down through all layers until it reaches the Physical layer (represented by the vertical red arrows).
  7. The Physical layer chops up the PDU's and transmits the PDU's over the physical connection (copper wire, fiber optic cable, radio link etc.). The Physical layer provides the real physical connectivity between hosts over which all communication occurs (represented by).
SUMMARY
Data from an upper layer is supposed to be passed down and inserted into the payload of a PDU in the layer below it. In the real world, the process of encapsulation (adding a header) doesn't always occur at all layers and sometimes things get chopped into smaller pieces so they will be easier to send and receive. Data passed over the Internet gets the first header from the application, then from Transmission Control Protocol (TCP), then Internet Protocol (IP) adds a header and passes it down to a physical connection. After that point, the hardware (Ethernet on LANs) chops the IP data into pieces and slaps its own header on it. Ethernet and other 802.x protocols also place a CRC at the end of the frame in the form of a frame check sequence. Although IP doesn't conform exactly to the model above, the model is still a good reference point for discussing Internet based network technologies and protocols.
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