Network layer

The Network layer, or OSI Layer 3, provides services to exchange the individual pieces of data over the network between identified end devices. To accomplish this end-to-end transport, Layer 3 uses four basic processes:
• Addressing
• Encapsulation
• Routing
• Decapsulation

Addressing
First, the Network layer must provide a mechanism for addressing these end devices. If individual pieces of data are to be directed to an end device, that device must have a unique address. In an IPv4 network, when this address is added to a device, the device is then referred to as a host.
Encapsulation
Second, the Network layer must provide encapsulation. Not only must the devices be identified with an address, the individual pieces - the Network layer PDUs - must also contain these addresses. During the encapsulation process, Layer 3 receives the Layer 4 PDU and adds a Layer 3 header, or label, to create the Layer 3 PDU. When referring to the Network layer, we call this PDU a packet. When a packet is created, the header must contain, among other information, the address of the host to which it is being sent. This address is referred to as the destination address. The Layer 3 header also contains the address of the originating host. This address is called the source address.