The third-lowest layer of the OSI Reference Model is the network layer. If the data link layer is the one that basically defines the boundaries of what is considered a network, the network layer is the one that defines how internetworks (interconnected networks) function. The network layer is the lowest one in the OSI model that is concerned with actually getting data from one computer to another even if it is on a remote network; in contrast, the data link layer only deals with devices that are local to each other.

While all of layers 2 through 6 in the OSI Reference Model serve to act as “fences” between the layers below them and the layers above them, the network layer is particularly important in this regard. It is at this layer that the transition really begins from the more abstract functions of the higher layers—which don't concern themselves as much with data delivery—into the specific tasks required to get data to its destination. The transport layer, which is related to the network layer in a number of ways, continues this “abstraction transition” as you go up the OSI protocol stack.

Some of the specific jobs normally performed by the network layer include:

• Logical Addressing: Every device that communicates over a network has associated with it a logical address, sometimes called a layer three address. For example, on the Internet, the Internet Protocol (IP) is the network layer protocol and every machine has an IP address. Note that addressing is done at the data link layer as well, but those addresses refer to local physical devices. In contrast, logical addresses are independent of particular hardware and must be unique across an entire internetwork.
  
  
• Routing: Moving data across a series of interconnected networks is probably the defining function of the network layer. It is the job of the devices and software routines that function at the network layer to handle incoming packets from various sources, determine their final destination, and then figure out where they need to be sent to get them where they are supposed to go. I discuss routing in the OSI model more completely in this topic on the topic on indirect device connection, and show how it works by way of an OSI model analogy.
  
  
• Datagram Encapsulation: The network layer normally encapsulates messages received from higher layers by placing them into datagrams (also called packets) with a network layer header.
  
  
• Fragmentation and Reassembly: The network layer must send messages down to the data link layer for transmission. Some data link layer technologies have limits on the length of any message that can be sent. If the packet that the network layer wants to send is too large, the network layer must split the packet up, send each piece to the data link layer, and then have pieces reassembled once they arrive at the network layer on the destination machine. A good example is how this is done by the Internet Protocol.
  
  
• Error Handling and Diagnostics: Special protocols are used at the network layer to allow devices that are logically connected, or that are trying to route traffic, to exchange information about the status of hosts on the network or the devices themselves.