What is Multiplexing and demultiplexing and how do these tasks interact with IP? I’m trying to learn and it’s just not clicking.
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They don’t interact at all.
Multiplexing is a physical (layer 1) layer bandwidth management technique which allows you to more fully utilize a physical transmission medium by dividing transmission space into sections that can be allocated to different senders as needed. There’s a lot of different ways that this happens, but that’s not really important to your question.
Data streams from any particular sender are sliced up, sent across the medium, and then reassembled before being forwarded as normal.
All of this happens between Device A processing out the L2 frame, and the receiving device processing it in at Layer 2. It’s transparent to all layers above the physical layer. The transport layer (layer 4) is unaware it ever happened. As far as L2 and above are concerned there’s no difference between frames transferred along a multiplexed link and those transferred along a dedicated link.
ELI5: Groceries go in the shopping cart, then into one or more bags at checkout, then out of the bags at home before getting put into the pantry. It doesn’t matter to the pantry if they were moved into and out of your car in one giant bad or 50 tiny bags, the result is the same.
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