Data Encapsulation is a process of taking one Protocol Data Unit (PDU) and enveloping it within a set of protocol header and trailer. In the OSI 7 layers model, each layer is primarily responsible for communicating with a peer layer on another machine. This communication between peers is done in "Protocol Data Units" (PDU), which consists of this layer's Header, Trailer and Data encapsulated.
Each layer may add a Header and a Trailer to its PDU as it proceeds through the layers. The Headers contain information that specifically addresses layer-to-layer communication. Headers, trailers and data are relative concepts, depending on the layer that analyzes the information unit. For example, the Transport Header (TH) contains information that only the Transport layer sees. All other layers below the Transport layer pass the Transport Header as part of their Data. At the network layer, an information unit consists of a Layer 3 header (NH) and data. At the data link layer, however, all the information passed down by the network layer (the Layer 3 header and the data) is treated as data. In other words, the data portion of an information unit at a given OSI layer potentially can contain headers, trailers, and data from all the higher layers.
For example, if computer A has data from a software application to send to computer B, the data is passed to the application layer. The application layer in computer A then communicates any control information required by the application layer in computer B by prepending a header to the data. The resulting message unit, which includes a header, the data and maybe a trailer, is passed to the presentation layer, which prepends its own header containing control information intended for the presentation layer in computer B. The message unit grows in size as each layer prepends its own header and trailer containing control information to be used by its peer layer in computer B. At the physical layer, the entire information unit is transmitted through the network medium.
The physical layer in computer B receives the information unit and passes it to the data link layer. The data link layer in computer B then reads the control information contained in the header prepended by the data link layer in computer A. The header and the trailer are then removed, and the remainder of the information unit is passed to the network layer. Each layer performs the same actions: The layer reads the header and trailer from its peer layer, strips it off, and passes the remaining information unit to the next higher layer. After the application layer performs these actions, the data is passed to the recipient software application in computer B, in exactly the form in which it was transmitted by the application in computer A.
The network layering and data encapsulation process appears to be cumbersome but it is a critical architecture concept which makes network communication modular and manageable.

Data Encapsulation
Related Terms: Protocol Data Unit, OSI model, Header, Trailer
