The stem of a tree only contains a thin tube of living tissue wrapped around old, dead wood. The inner and outer surfaces of this tube are both growing sheets that push out new cells as the tree grows, kind of like human skin.
On the inside surface (the vascular cambium), these new cells are boxy and rigid, and they become the woody core of the stem. On the outside surface (the cork cambium), the new cells are usually more spongy and tough, and they gradually form a protective layer of bark.
As the tree expands, the bark layer has to stretch to keep up. This may be accomplished by long vertical cracks appearing, like in an oak or pine tree; or by the too-tight older layers peeling off horizontally, like in a birch or cherry tree; or by the old bark shedding off as a powder, like in beeches (and human skin).
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