The first problem is that electrical transmission can be affected by electromagnetic interference. Interference can have various sources including natural phenomenons (like thunderstorms, variations of the magnetic field,...) but also other electrical signals (such as interference from neighboring cables, interference from neighboring antennas,...). Due to these various types of interference, there is unfortunately no guarantee that when a host transmit one bit on a wire, the same bit is received at the other end. This is illustrated in the figure below where a `DATA.request(0)` on the left host leads to a `Data.indication(1)` on the right host.
To solve this problem, datalink protocols associate a `sequence number` to each data frame. This `sequence number` is one of the fields found in the header of data frames. We use the notation `D(x,...)` to indicate a data frame whose sequence number field is set to value `x`. The acknowledgments also contain a sequence number indicating the data frames that it is acknowledging. We use `OKx` to indicate an acknowledgment frame that confirms the reception of `D(x,...)`. The sequence number is encoded as a bit string of fixed length. The simplest reliable protocol is the Alternating Bit Protocol (ABP).
The initial state of the sender is `Wait for D(0,...)`. In this state, the sender waits for a `Data.request`. The first data frame that it sends uses sequence number `0`. After having sent this frame, the sender waits for an `OK0` acknowledgment. A frame is retransmitted upon expiration of the retransmission timer or if an acknowledgment with an incorrect sequence number has been received.
The receiver first waits for `D(0,...)`. If the frame contains a correct `CRC`, it passes the SDU to its user and sends `OK0`. If the frame contains an invalid CRC, it is immediately discarded. Then, the receiver waits for `D(1,...)`. In this state, it may receive a duplicate `D(0,...)` or a data frame with an invalid CRC. In both cases, it returns an `OK0` frame to allow the sender to recover from the possible loss of the previous `OK0` frame.
In the figure above, when the sender receives `C(OK,0,[2])`, it knows that all frames up to and including `D(0,...)` have been correctly received. It also knows that frame `D(2,...)` has been received and can cancel the retransmission timer associated to this frame. However, this frame should not be removed from the sending buffer before the reception of a cumulative acknowledgment (`C(OK,2)` in the figure above) that covers this frame.