In networking terminology, a host is any device that is connected to a network and provides an endpoint for networked communication. A host might be a desktop computer, a server, an iOS device, a virtual machine running on a server, or even the VoIP telephone sitting on your desk. It is called a host because it hosts the applications and daemons that run on it.
When one host sends data across a network, it divides the data into small pieces called packets. These packets can be varying lengths, up to the maximum size allowed by the physical network interconnect (again, more on this later).
A packet generally contains three basic parts: a header that tells where the packet should be sent, a payload that contains the actual data, and a trailer that contains checksum information to ensure that the packet was received correctly.
When one packet contains another packet (generally of a different type), this is called encapsulation.