[tor-relays] Circuit ID assignment

Hi all,

I wanted to learn more about how Tor circuit IDs work. Correct me if I'm wrong, but this is my current understanding:

Each hop along the Tor network has its own circuit ID number. (No universal circuit ID number is used to identify a ip-to-ip stream of traffic). How are the circuit ID numbers determined at each hop? What generates the circuit ID number given to a packet?

Thanks!