I use this as a reminder.

Data Encapsulation

Data - Everything Above

Segments - Transport Layer

Packets - Network Layer

Frames - Data Link Layer

Bits - Physical Layer

When the stream of information is being passed down the layers a header is attached with specific information for that layer, such as the IP destination and source header for the Network Layer.

When the information is being reassembled on the receiving end, each header is stripped off and passed to the next layer up until it is considered real data and therefore legible to us humans - as long as their are no errors.