This article is from the Amiga Networking FAQ, by Richard Norman with numerous contributions by others.
A protocol is software that is required to use the physical connection. It is responsible for establishing the connection and sending and receiving the data in packets. Modem software is a crude example.
The software is called a protocol because there must be cooperating software on each end, but they don't have to written by the same vendor. Instead a "protocol" for the proper exchange of data is defined and released as a standard (such as TCP-IP ) or licensed as proprietary (such as DECnet ). As long as the vendor on each end adheres to the protocol a connection can be sustained which will support an application.
TCP/IP is in the broadest use for several reasons, but mostly because vendors could get and use the standard for basically free. DECnet was very popular because of its robustness and the quality of the VAX systems. The low cost, graphics power, and lure of a standard operating system drew users to UNIX systems which used TCP/IP because of the cost and availability. This has resulted in DECnet falling way behind in numbers. Other examples of protocols are Appletalk, IPX, and SNA. They also suffer from being proprietary.
Due to the constant growing of the size of the wide area networks (WAN), a more robust protocol is required which will support a large number of addresses which is the numeric value assigned to each computer on a network. Two approaches are being worked currently. One is to revamp and extend TCP/IP while maintaining backwards compatibility. The other is an international standards effort called OSI Open Systems Interconnect. OSI is moving very slowly which is making it difficult to gain vendor support. TCP/IP will almost certainly be enhanced regardless if OSI is successful or not.
In addition to these major protocols there are numerous other proprietary protocols such as SNA by IBM or IPX by Novell. Some fill special niche requirements, and some of them don't scale well to the WAN environment. Some are so proprietary they will not run on but a single vendor's hardware.
The latest wrinkle in the protocol world are SLIP and PPP which allow the TCP/IP protocol to be used over a modem connection. Typically a remote machine such as a laptop is hooked by modem to a new generation of terminal servers which can convert between SLIP or PPP and regular TCP/IP. The terminal server is connected to both the modem and the LAN. This setup gives the remote user full (although slower) TCP/IP access to the LAN.
DECnet can also be configured to use a serial connection.
 
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