The Network layer is concerned about the path through the network. It is responsible for routing, switching and controlling the flow of information between hosts. The Network layer converts the segments into smaller datagrams that the network can handle. The Network layer does not guarantee that the datagram will reach its destination. The network hardware source and destination addresses are added.
The Data Link layer is a firmware layer of the network interface card. The Data Link layer puts the datagrams into packets (frames of bits: 1s & 0s) for transmission and assembles received packets into datagrams. The Data Link layer works at the bit level and adds start/stop flags and bit error checking (CRC or parity) to the packet frame. Error checking is at the bit level only, packets with errors are discarded and a request for re-transmission is sent out. The Data Link layer is concerned about bit sequence.
The Physical layer concerns itself with the transmission of bits and the network card's hardware interface to the network. The hardware interface involves the type of cabling (coax, twisted pair, etc..), frequency of operation (1 Mbps, 10Mbps, etc..), voltage levels, cable terminations, topography (star, bus, ring, etc..), etc.. Examples of Physical layer protocols are 10Base5 - Thicknet, 10Base2 - Thinnet, 10BaseT - twisted pair, ArcNet, FDDI, etc.. See Fig. 9.