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I am having some trouble understanding why does a WAN link need encapsulation, such as MPLS or frame relay? Is it merely to encrypt the info from one LAN to another LAN across the internet?

IP packets are encapsulated in a layer 2 protocol, whether they are sent on a LAN or WAN. Frame relay is one such WAN layer 2 protocol. There are others, but most are being rapidly replaced by Ethernet. On LANs, of course, you have Ethernet and Wi-fi.

MPLS doesn't quite fit into the TCP/IP or OSI model. Some consider it a "layer 2.5" protocol.

The term encapsulation is used to describe a process of adding headers and trailers around some data. For example, here is what happens when you send an email using your favourite email program (like Outlook or Thunderbird):

• The email is sent from the Application layer to the Transport layer.




• The Transport layer encapsulates the data and adds its own header (with its own information, such as which port will be used) and passes the data to the Internet layer




• The Internet layer encapsulates the received data and adds its own header, usually with information about the source and destination IP addresses. The Internet layer than passes the data to the Network Access layer




• The Network Access layer is the only layer that adds both a header and a trailer. The data is then sent through a physical network link.

Fore more details wiki

Layer 2 Encapsulation covers a number of purposes, most notably framing, error detection, addressing, and protocol layering, and these really apply whether the networking is wide area or local area.

• 
  Framing: We need some way to reliably chunk the data into frames


• 
  Error detection: If the encapsulation has addressing or length fields, it's normally vastly much more efficient if it can do its own error detection (and perhaps correction), so it can discard frames which have been corrupted. It's good to put this at a low level, because it's much more likely to have knowledge of what kinds of errors are probably and improbable.


• 
  Addressing: Very frequently there are multiple devices on the medium, and we want to be able to select which to disturb with this frame: most notable for broadcast media such as ethernet, and often not present in encapsulation for point-to-point networks.


• 
  Protocol layering: it's very common that the technology should be capable of being used by several upper protocols, perhaps internet protocol and some other. The encapsulation has some method of saying which upper-layer protocol stack should receive it.

The simplest encapsulation is SLIP, which just does framing and nothing else: it's for point to point links, so addressing isn't used, and the only upper protocol suppported is IP, so it doesn't even have to say that.

One of the most complex is ethernet, which does framing, error checking, broadcast/unicast, local addressing and upper protocol selection.