If the IP packets contain encapsulated TCP packets, the IP software will pass them ``up'' to the TCP software layer. TCP sequentially orders the packets and performs error correction, and implements virtual circuits, or connections between hosts. The TCP packets contain sequence numbers and acknowledgements of received packets so that packets received out of order can be reordered and damaged packets can be retransmitted.
TCP passes its information up to higher-layer applications, e.g., a TELNET client or server. The applications, in turn, pass information back to the TCP layer, which passes information down to the IP layer and device drivers and the physical medium, and back to the receiving host.
Connection oriented services, such as TELNET, FTP, rlogin, X Windows, and SMTP, require a high degree of reliability and therefore use TCP. DNS uses TCP in some cases (for transmitting and receiving domain name service databases), but uses UDP for transmitting information about individual hosts.