This Layer defines logical addressing (e.g IP address) in order to identify each endpoint in a network and provide end-to-end delivery of packets. Think of the Network Layer as the postal service in a country. When you want to send a letter to a friend, you just need to know the destination postal address (e.g destination IP address) and you send the letter. The postal service (e.g the Network Layer) will determine the path to the destination (e.g IP Path Determination) and take care of the delivery (e.g using IP Routing). The two endpoints do not need to know the exact path taken for the delivery of the letter.
This Layer also encapsulates data into Packets, and defines how to fragment a packet into smaller pieces to accommodate media with smaller Maximum Transmission Units. An IP Router works in this Layer, since it can use the IP address information to route packets.
Examples of Layer 3 Specifications and Protocols