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I am trying to figure out how the packet flows over a Tor network.. There is a mix of information.. Some claim that the ISP is not aware of the payload as the complete data is encrypted whereas some say that your ISP is not used at all when using Tor network. AFAIK my packets go to the outer web via my ISP and there is no way to by pass that. I might be wrong. Can someone give me a detailed packet flow?
I'll take a stab at this and someone else can correct my possibly wrong and definitely simplified explaination.
We are going to use a packet is an envelope/postcard metaphor. So imagine that you are trying to communicate with Google. Your computer usually just takes that message throws it into an envelope and sends it to Google, with your ISP representing the post office. Because the data is unencrypted, this envelope is actually more like a postcard.
Using Tor things are a little bit different. You have a list of your 1,000 closest friends (exit nodes). You randomly select three of them (lets call them Alice, Bob, and Charles). You take your message that you are sending to Google and put it on a postcard. Then you take that postcard and put it in an envelope and address this outer envelope to Charles. You then seal it with a glue that only Charles can lick to open (encryption). You take that envelope destined for Charles and you repeat the previous process, except this time you address it to Bob (again with the special glue). You do this one more time using an envelope destined for Alice.
You then give that envelope to the mailman (your ISP). Because the list of Tor nodes is public and the protocol is well known, you ISP knows that you are using Tor and knows that Alice is the first person you are talking to. Alice can only open her envelope and see a message to Bob, so she knows you are using Tor and that she is to expect a reply via Bob at some point. Bob, when he opens his envelope, knows only that someone somewhere is using Tor and that they sent their message to Alice and that he has to send it to Charles. Charles knows that someone somewhere is using Tor and they want to send a postcard to Google. Google knows someone is using Tor and wanted to talk to them.
To get Google's reply back to you the process is repeated but in reverse.
Did that help at all?
Thank you, Derric Atzrott