Encapsulation is the process of packaging data as it moves through network layers. When a sending device prepares data to be transmitted across a network, the data moves downward through each layer of the model. At each stage, the current layer wraps the incoming data unit with its own specialized header containing protocol and addressing metadata.

Once the transmitted signal arrives at the destination device, the reverse process occurs. As the incoming data travels back upward through the layers, each layer reads the relevant control information and strips away its corresponding header before passing the underlying payload to the layer above.