OSI Seven-Layer Model

In the 1980s, the European-dominated International Standards Organization (ISO), began to develop its Open Systems Interconnection (OSI) networking suite. OSI has two major components: an abstract model of networking (the Basic Reference Model, or seven-layer model), and a set of concrete protocols. The standard documents that describe OSI are for sale and not currently available online.
Parts of OSI have influenced Internet protocol development, but none more than the abstract model itself, documented in OSI 7498 and its various addenda. In this model, a networking system is divided into layers. Within each layer, one or more entities implement its functionality. Each entity interacts directly only with the layer immediately beneath it, and provides facilities for use by the layer above it. Protocols enable an entity in one host to interact with a corresponding entity at the same layer in a remote host.

The seven layers of the OSI Basic Reference Model are (from bottom to top):

1. The Physical Layer describes the physical properties of the various communications media, as well as the electrical properties and interpretation of the exchanged signals. Ex: this layer defines the size of Ethernet coaxial cable, the type of BNC connector used, and the termination method.
2. The Data Link Layer describes the logical organization of data bits transmitted on a particular medium. Ex: this layer defines the framing, addressing and checksumming of Ethernet packets.
3. The Network Layer describes how a series of exchanges over various data links can deliver data between any two nodes in a network. Ex: this layer defines the addressing and routing structure of the Internet.
4. The Transport Layer describes the quality and nature of the data delivery. Ex: this layer defines if and how retransmissions will be used to ensure data delivery.
5. The Session Layer describes the organization of data sequences larger than the packets handled by lower layers. Ex: this layer describes how request and reply packets are paired in a remote procedure call.
6. The Presentation Layer describes the syntax of data being transferred. Ex: this layer describes how floating point numbers can be exchanged between hosts with different math formats.
7. The Application Layer describes how real work actually gets done. Ex: this layer would implement file system operations.

The original Internet protocol specifications defined a four-level model, and protocols designed around it (like TCP) have difficulty fitting neatly into the seven-layer model. Most newer designs use the seven-layer model.

The OSI Basic Reference Model has enjoyed a far greater acceptance than the OSI protocols themselves. There are several reasons for this. OSI's committee-based design process bred overgrown, unimaginative protocols that nobody ever accused of efficiency. Heavy European dominance helped protect their investments in X.25 (CONS is basically X.25 for datagram networks). Perhaps most importantly, X.25 data networks never caught people's imagination like the Internet, which, with a strong history of free, downloadable protocol specifications, has been loath to embrace yet another networking scheme where you have to pay to figure how things work.
And why should we? OSI's biggest problem is that doesn't really offer anything new. The strongest case for its implementation comes from its status as an "international standard", but we already have a de facto international standard - the Internet. OSI protocols will be around, but its most significant contribution is the philosophy of networking represented by its layered model.
If the Internet community has to worry about anything, it's the danger of IETF turning into another ISO - a big, overgrown standards organization run by committees, churning out thousands of pages of rubbish, and dominated by big business players more interested in preserving investments than advancing the state of the art.