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The OSI model (Open Systems Interconnection defined by ISO 7498 ) model defines the idea interoperability between the network devices and software by dividing the functions of a protocol into different layers. This is useful for troubleshooting and teaching in network concepts. It brought together a common idea whereas before, it was vendor specific and proprietary. Layers 4-7 will deal with end to end communications between the data source and the destination where as the Layers 1-3 will deal with the communications between the devices found on the network.

1.  Physical - This layer conveys the bit stream through the network at the electrical and mechanical level. It provides the hardware means of sending and receiving data on a carrier. Establishment and termination of a connection to the connection medium are found here.
2.  Data-Link - Data packets are encoded and decoded into electrical signals at this layer. The functional and procedural means of transferring data between network entities are found here. 
3.  Network - This layer creates the logical paths, known as virtual circuits, for transmitting data from node to node. This layer includes routing and forwarding. 
4.  Transport - This layer manages the transfer of data between end users and error-checking. It ensures complete data transfer. 
5.  Session - This layer manages the dialogue between end user processes. Duplex or half duplex operation, establishing check pointing, termination and restart procedures are found here.  It deals with session and connection coordination. 
6.  Presentation - This layer formats and encrypts data to be sent across a network. Sometimes called the syntax layer. 
7.  Application - This is the layer at which communication partners are identified, quality of service is identified, user authentication and privacy are considered, and any constraints on data syntax are identified. Application services are provided by this layer for file transfers (FTP), telnet, email, and other network software services.

Phrases to remember the order of the Layers:
- Please Do Not Throw Sausage Pizza Away
- All People Seem To Need Data Processing

Related Links: ISO 7498  TCP/IP Guide  Cisco  Whatis

Note: The standard documents that describe OSI are for sale and not currently available online.