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Encapsulation is a method of designing modular communication protocols in which logically separate functions in the network are abstracted from their underlying structures by inclusion or information hiding within higher level objects.
The physical layer is responsible for physical transmission of the data. Link encapsulation allows local area networking and IP provides global addressing of individual computers; UDP adds application or process selection, i.e., the port specifies the service such as a Web or TFTP server.
In discussions of encapsulation, the more abstract layer is often called the upper layer protocol while the more specific layer is called the lower layer protocol. Sometimes, however, the terms upper layer protocols and lower layer protocols are used to describe the layers above and below IP, respectively.
Encapsulation is a characteristic feature of most networking models, including the OSI Model and TCP/IP suite of protocols.
An image of encapsulation of application data descending through the layers