The Internet Protocol was designed for transmitting blocks of data called datagrams from a source location, to one or more destinations. It is specifically limited to provide the functions necessary to deliver a datagram from a source to a destination over an interconnected system of networks. There is no functionality for data reliability, flow-control, or sequencing. It works by using one local network to connect with another local network, until the datagram is delivered to its destination - although, a datagram does not have to leave the local network at all if the destination does not reside outside of the network.
The source and the destination are specified as numeric addresses, also known as IP addresses. An IP address consists of four bytes. The combined sequence of the four bytes is unique for each connection to the network (a single computer can have more than one connection to the network, and therefore can have more than one IP address).
Let's say that you want to send the message "Hello" from your computer to another computer on the network. Your computer cannot simply transmit the 5 bytes of your message over the network cable. It first has to create a datagram. In simple terms, the datagram would include the identity of your computer (the sender), the identity of the computer you are sending the message to, and some kind of checksum that allowed the receiving computer to verify that the datagram arrived intact. Your computer would deliver that datagram to a host or gateway on your network.
The gateway will then determine where the datagram needs to go next. If the destination computer is on the same local network, it may simply deliver it to the destination. If the destination is outside of the local network, the datagram is delivered to another host or gateway "downstream" from your network. After that, either that host or gateway would then send the datagram even further downstream toward the destination; or if the destination resides on the local network of the current host or gateway, it will deliver the datagram to the final destination itself.
During this journey, it is possible for the datagram to become corrupted, be misrouted (and lost), or simply expire because the journey was too long. The Internet Protocol does not provide any notification capabilities to inform the sender of a delivery problem. It is also possible for large datagrams to be chopped into multiple smaller datagrams if any host or gateway along the path cannot handle the size of the datagram. Each datagram is then broken into as many smaller datagrams as it needs to hold all of the data. Those datagrams then have to be reassembled at the destination.
See Also
Transmission Control Protocol (TCP)
Simple Mail Transfer Protocol (SMTP)
An ECHO client and server using TCP